Facebook said to be readying electronic payment system, could preempt Apple entrySocial media behemoth Facebook is reportedly nearing a deal with Irish authorities that would allow the company to offer its European users electronic payment and remittance services ahead of Apple's hotly-anticipated entry into the market.
As part of the agreement, Facebook will be allowed to issue "e-money" to users, who can then transfer the funds to one another throughout Europe. News of the deal was first reported by the Financial Times.
Facebook is said to have approached a number of London-based financial startups —including Azimo, TransferWise, and Moni Technologies —about partnering on the effort. In an apparent sign of the seriousness with which Facebook is taking the rollout, the company reportedly offered $10 million for the right to recruit an Azimo co-founder.
"Facebook wants to become a utility in the developing world, and remittances are a gateway drug to financial inclusion," a source familiar with Facebook's thinking told the Times. The company is believed to have chosen platform partnership executive Sean Ryan to helm the e-money project.
Facebook already processes more than $2 billion in payments each year, mostly for social games
If Facebook does proceed with such a system, it would give the company —with more than 1 billion users worldwide —a head start in a market that Apple is widely believed to be targeting. In January, Apple CEO Tim Cook admitted that the possibility of a future iPhone-based payment system was one of the foundational assumptions behind the iPhone 5s's Touch ID fingerprint sensor.
"The mobile payments area in general is one we've been intrigued with," Cook sad in the company's January earnings call, adding that it was "one of the thoughts behind Touch ID."
"You can tell by looking at the demographics of our customers, and the amount of commerce that goes through iOS devices versus the competition, that it's a big opportunity on the platform a big opportunity on the platform," he continued.
At least one existing financial institution is thought to be willing to work with Apple to get such a system off the ground. World payment leader PayPal is reportedly "willing to white label parts of its payment service," including fraud detection and processing, to land a partnership with the iPhone maker.