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Follow the money: Why messaging is disrupting payments

Understand the motivation for monetizing messaging apps with payment options. Learn what Facebook Messenger hopes to achieve with payments.

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Messaging is a “winner takes all“ business.

Nobody wants to have three apps to communicate with friends and family. If your peers are using one platform, you are likely to follow – a classic network effect. That’s why in every country the most used messaging platform is leading the messaging field by a large. In most countries that is WhatsApp, Messenger comes second. All big messaging companies are now on a mission to claim a new territory: payments.

Three simple drivers:

1) The opportunity:

  • One of the main characters of currency is that it is used by everybody and easy to handle. Messaging apps are used by nearly everybody to send and receive information – so why not extend it to money?

2) WeChat paved the way

  • One of the main drivers behind WeChat’s success in China is payments
  • Today WeChat is already where all other messaging companies strive to be. They dominate P2P transactions, business to consumer and even offline payments by using QR codes. WeChat pay is everywhere and basically replacing peoples wallets completely.
  • On last year’s Chinese new year 46 billion “ virtual red envelopes” (it’s a Chinese tradition to send money in this red envelopes) were sent via WeChat

3) The Amazon effect:

  • Once a platform has a user’s credit card details and set up a convenient payment method, it is the starting point of rolling out many more services around commerce and content. he value of every new user acquired skyrockets and so does the platform’s.

Here are a few facts on how the space is evolving right now

Kakao Talk

  • Messaging app Kakao Talk (42 mio user) launched Kakao Bank as a separate app and corporation but using the network effect of Kakao Talk.
  • On its launch day 300k users signed up and over 50 Mio € were put in deposits.


  • WhatsApp rolled out their beta-payment feature to around one million users in India this month.


  • ApplePay is a success story most people tend to overlook. Launched in October 2014 it’s now accepted in 50% of all shops in the US. According to ApplePay’s VP Jennifer Bailey, “It’s the world’s most accepted contactless payment technology.“
  • In November 2017 Apple soft-launched P2P money transfers to iMessage in the US


  • The VP of Messenger at Facebook is David Marcus, a former president of Paypal. That underlines their ambitions pretty clearly.
  • Messenger already launched the possibility to send and receive money from your Facebook friends in 2015 in the US and in the UK and France last year.
  • Despite the early launch, the Messenger team worked on anything but pushing their payment feature. In that new environment and their quickly growing business platform, (chatbots) that might change quickly.

The biggest problem of payments

Every payment solution needs to eliminate the threshold that is needed before users feel confident to enter their credit card data. It is not surprising that Snapchat’s Snapcash did not succeed with a user interface where everything you send or receive disappears after seconds. Such an environment is designed to create more privacy for shared content, but not more trust for transactions. Table stack for transactions is security, reliability and transparency for the sending and receiving party. iMessage and ApplePay are very well positioned to become the digital wallet of iOs users and to disrupt payments in the next few years. Facebook with it’s two messaging platforms WhatsApp and Messenger still has two big advantages against iMessage. First, it’s running on iOs and Android. That more than doubles the market and strengthens the network because Apple users can transfer money to Android users. Second, they have two different platforms to figure out what works best. Facebook is very well known for testing and learning fast.

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