News that Facebook may be going into the online banking game has raised concerns among merchants who are wondering how they would compete in a marketplace of person-to-person payments. While the concept of Facebook Banking only appears to be in testing mode right now, there are some legitimate concerns from online and offline businesses that make their money the old fashioned way.
For the moment, however, merchants shouldn’t panic. First of all, there isn’t a clear method that Facebook would use to authenticate and transmit payments to “Friends” and third parties. Assuming that Facebook goes ahead with such a process, there will almost certainly be channels created for merchants and businesses to accept payments. Right now the potential for “friend fraud” might be holding up implementation of any apps or widgets that would allow social network members to transmit money to each other. The social network will also have to have a clear dispute resolution and chargeback policy in place in case people indicate that money was transmitted under fraudulent circumstances.
In the future, collecting payments through Facebook may be a worthwhile business channel. Currently, however, people still use traditional credit card terminals, payment gateways, and cash to transact business. Even if Facebook becomes a financial juggernaut, people will still come to stores to do in-person shopping. Right now, at Capital Processing Network, we are seeing more year-over-year reliance on credit and debit cards, whether they are presented in-person or online. Therefore, as a merchant, you will still be well positioned tomorrow if you upgrade to Capital Processing Network’s low-risk portfolio today, no matter how many social networks move into the field of financial services.