Google has Wallet. Then there’s PayPal and the Square and Tile and others piling into the financial services sector. But Facebook has a much smarter approach and likely doesn’t much care about the Canadian, American or European markets…they want the developing world. This is an extremely clever move and is going to give Western Union a run for their uhm, money.
Remittance Market is Massive
According to the World Bank (here) the global remittance market topped $440 BILION in 2010 and it has been on the rise for years. Out of that, they estimate around $325 Billion went to developing nations…that’s a lot of diaspora in Western, developed nations (the Global North) sending money back to friends and family in developing nations (Global South.) Within this of course are the various fees charged by the banks and services that transmit the funds. The global leader is Western Union, who does not disclose the profit they make from remittances.
The remittance market is largely made of people from developing nations like the Philippines, Nigeria, Ghana, Namibia, Honduras etc. who go to work in a wealthier nation to support their families back home. Now that mobile device adoption is global and services like Kenya’s brilliant use of M-Pesa for mobile phones, just makes it easier for Facebook.
First The Address Book Now The Balance Book
So it is a brilliant way for Facebook to build loyalty and capture market in developing nations. One can expect that a mobile app or form of capability will quickly tie into their service.
But Developing Nations Non-Elites Aren’t Online!
Anyone who still believes that developing nations aren’t actively engaged in social media and the Internet must be suffocating from the sand around their head at this point. In my time at MediaBadger we consistently proved to government foreign affairs departments that even in supposedly illiterate and extremely poor countries, there was an active online population beyond the usual elites.
Facebook is very clever. They will no doubt build a highly secure, safe way to transfer money. Then, with other programs to bring Internet infrastructure into developing nations, they now have a way to help monetize that capital cost. I’d lay odds that within two years of launch, Facebook will be the largest provider of remittance fee services in the world, potentially worth hundreds of millions. This will also place Facebook in an interesting place when it comes to the global financial system and diplomatic affairs.