Facebook's challenge to Australia's big banks is coming as early as next year, when the social media giant is expected to introduce peer-to-peer payments within its Messenger service, hot on the heels of local banks' expected launch of their own P2P payments network.

In July, The Australian Financial Review revealed Facebook had been awarded a patent to allow it to launch Messenger payments in Australia, which will allow users to pay family, friends and groups once they have linked up a bank-issued debit card to their social media account.

More than 13 million people use Facebook Messenger in Australia each month, a figure that will have local banks – who have invested more than $1 billion in their own P2P payment platform – worried the Silicon Valley giant will vacuum up their customers.

Sources said Facebook is targeting a 2018 launch in Australia, however the introduction is dependent on a number of regulatory requirements being met in time.

Facebook vice-president of global marketing solutions Carolyn Everson told the Financial Review the company was excited about its payments service but did not have an announcement to make with regards to Australia and confirmed it was looking at global expansion.

"We obviously have payments in the United States ... we are looking at all markets," she said.

"Our goal would be to deliver a seamless and frictionless consumer experience that will not only be transformational for peer-to-peer and consumer but also how consumers can interact with businesses. But it's complicated. It takes time. It's country by country. And so I have nothing to report for Australia specifically but I can tell you that we're very bullish overall about payments."

On November 7, Facebook launched Messenger payments in Britain and France, marking the second and third markets it has expanded the service into, the first being the United States. Facebook launched P2P payments in the US in 2015 after hiring former president of PayPal, David Marcus, as its vice-president of messaging.

The Reserve Bank of Australia's Payments System Board is the payments regulator in Australia but it may not have to formally approve Messenger payments, industry sources said.

As long as Facebook makes an agreement with a payments gateway and acceptance service to facilitate access to Australia's payments infrastructure and abides by the Australian Securities and Investments Commission's consumer codes of conduct, it will be able to begin offering payments through Messenger.

Messenger payments would compete directly with the new, real-time payments network known as the New Payments Platform, which has been in development since 2013 and is expected to go live in early 2018.

The big Australian banks have spent more than $1 billion building this system under guidance from the RBA and are planning to launch a new Osko brand, via the bank-owned BPay, to allow customers to make and receive instant payments using a "PayID" rather than an account or BSB number.

The arrival of Messenger payments in Australia could make it harder for the banks to recover their investment in the NPP.

The big banks are acutely aware of the threat Messenger payments poses to their grip over financial information. Westpac referred to the Financial Review's original story, which broke the news of Facebook's Australian patent, in a Productivity Commission report on competition in the financial system.

The relationship between Australia's big banks and Silicon Valley technology giants is not cosy. Banks desire to remain the centre of their customers' online and mobile experience and fear losing control to the likes of Facebook and Apple.

Earlier in the year, Westpac, Commonwealth Bank of Australia, National Australia Bank, and Bendigo and Adelaide Bank were knocked back by the competition regulator after asking permission to form a block to give themselves more negotiating power in discussions with Apple.

In July, Apple banned a feature of Westpac's mobile banking application, which let customers make payments on popular chat applications such as Facebook Messenger, WhatsApp, Snapchat and WeChat, after it had already been running for three months.

http://www.afr.com/business/media-and-marketing/facebooks-messenger-payments-loo...


When the big banks fall, don't let the politicians guarantee taxpayers to pay for their financial loss.


Banks are the latest dodos ... heading for extinction.

Big banks will fall because their business model is being chipped away on multiple fronts.


For example. decentralised loans to businesses at lower rates of interest are being rolled out on the blockchain via smart contracts.

Next will be decentralised loans for purchasing real estate on the blockchain.

Interest earned on ownership of cryptocurrency by locking it up in smart contracts.

Be it facebook to cryptocurrency, banks will die.
Fiat currencies will die. Since people have a choice of losing their value to inflation via fiat
verses
gaining buying power with deflationary cryptocurrency (along with the ability to earn interest).

When fiat currencies collapse across the world, and it will a lot quicker than most realise, banks across the world will also collapse.


Taxpayers have a choice. Be the fall guys and pay for all these banks' folly ... or just let them fall.