To get a snapshot of Facebook‘s payments ambitions, you need to look beyond its digital currency aspirations.
While Facebook’s digital currency project Libra has been the focus of recent media attention, the social media giant is making a major e-commerce payments play, with a focus on using Instagram and Facebook Marketplace as enablers. In fact, the company reported that payments and other fee revenue was $262 million, up 36% year-over-year, according to its second quarter earnings report.
In March, Facebook rolled out Instagram checkout — a feature whereby buyers can carry out payments that are embedded into shoppable posts. The company reported that 2.7 billion people use Facebook, Instagram, WhatsApp or Messenger each month and more than 2.1 billion people use at least one of the these services daily, amplifying opportunities to monetize e-commerce and payments.
Here are three key payments takeaways from from Facebook’s call with investors on Wednesday night:
WhatsApp is a new frontier for embedded payments and e-commerce
Facebook has been testing WhatsApp payments in India, and it’s looking to launch the feature in other countries as well. It’s a capability set that seeks to challenge Venmo and iMessage, with the goal of letting customers send payments to one another and interact with businesses via messaging through WhatsApp business.
WhatsApp’s social feed also is a strategic tool the company is using to build engagement. “WhatsApp status already is the most popular of femoral stories product in the world, and we continue to see good momentum there with millions of small businesses using WhatsApp business,” CEO Mark Zuckerberg said.
Facebook is taking a cautious approach to rolling out Instagram checkout
The company currently is testing Instagram checkout with a closed beta of 23 brands (the company was mum on their feedback to the beta), and Facebook isn’t in a rush to scale the tool quickly, chief operating officer Cheryl Sandberg noted. The goal is to connect Instagram checkout to getting a greater return on investment from its ad tools.
“If we can help people close the loop a little more so they are looking more directly at products, that makes our ads more valuable,” Sandberg said. “If we can help people checkout and pay for the products and even buy the products, it makes the consumer experience better.”
Libra is about giving more people access to tools to carry out e-commerce transactions powered by social payments
“The goal is to empower billions of people around the world, who use services like WhatsApp but might be excluded from banking services, with access to a safe, stable and well-regulated cryptocurrency,” Zuckerberg told investors, noting that the company is prepared to wait “however long it takes” to address regulators’ concerns.