Facebook faces trust challenge as it moves into consumer finance

As it moves into consumer-facing financial services, Facebook will struggle with the challenge of establishing trust, according to John Egan, Head of Innovation and Foresight at Lafferty Group.  Facebook has announced the imminent arrival of a person-to-person payment system – with some caveats. Payments will initially be available only to US users, and will run on the existing banking rails, with users needing to add a MasterCard or Visa debit card while making the first transaction. Aside from the mechanics of the transactions, Facebook will have to confront the fact that its users may be reluctant to invest faith in Facebook as a financial conduit. “While they will benefit from widespread adoption and ease of use, Facebook will struggle to establish trust,” said Egan. “Social data is typically valued far less than financial data.” However, he said the announcement substantiates the idea that the evolving business model of the internet is the procurement and leveraged ownership of transactions. Egan said Facebook has been working towards the payments feature since it separated the messenger function from the Facebook app. Facebook is trying to meet market expectations that it will move eventually into payments and by registering debit cards of its users it may be easing the way to enabling direct payments to businesses advertising on the platform.