8247130794_a9f55f5aa1_b

Facebook Poaches PayPal CEO, Could Be Your Future Bank

June 10, 2024         By: Michael Foster

It all started when Facebook bought WhatsApp for $19 billion in cash and stock, making it one of the most expensive acquisitions in human history.

Now that Facebook has poached PayPal’s former CEO, David Marcus to head up Facebook Messenger, the social site’s plans are obvious: the company wants to become your bank.

The infrastructure is there, and the know-how is coming. With the staff and service in place, implementation will be easy.

All Facebook will need to do is start offering a service where you can connect your bank and/or credit card to your WhatsApp and Facebook accounts, and then you can send money straight to them through a secure transaction.

Because Facebook monetizes itself through advertisements and because it already has billions of users, it should be able to offer payment transfers at less cost than PayPal. While it may not reach Dwolla’s level of low prices, it can certainly undercut its biggest competitors like Google Wallet, Square, and, of course, PayPal.

The value for Facebook goes much beyond being a transaction processor.

By helping you pay for things, Facebook is keeping you in their system. It’s collecting data about who you pay, when, and why. This is all valuable stuff, and it can help Facebook grow bigger and bigger, even after nearly a quarter of the world’s population is already on the site.

The idea isn’t far fetched.

In China, WeChat has offered payments through its messaging service for a while, although Chinese consumers only use it for small payments.

WhatsApp/Facebook Payments could succeed in America where WeChat struggles if they offer instant payments at a fraction of the cost of PayPal.

While low-cost startups have struggled from scale, the big players like Square and PayPal have been able to charge big fees. With scale and low cost, money transfers on Facebook would be the disruptor that the mobile payments world needs.