On Monday morning, The Financial Times reported that Facebook (NASDAQ:FB) is in the process of gaining regulatory approval in the Republic of Ireland to "issue units of stored monetary value that represent a claim against the company." This would flow through to the rest of the E.U. and represents a giant step toward strengthening user relationships as well as generating an incremental source of cash flow outside of advertising.
By making it easier to transfer money across borders, Facebook could be entering a what has been lucrative business for companies like Western Union and even Wal-Mart, through Moneygram. This service appears to be beating Apple (NASDAQ:AAPL) to the punch and follows in the footsteps of Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) initiative to facilitate money transfers via email. We're still far from revenue recognition, but this could be a sizable opportunity for any of the companies who participate.
eBay is the leader, but it's focused on merchants
EBay's (NASDAQ:EBAY) PayPal has been the leader in online payments and has 143 million accounts worldwide. This large number of accounts facilitated $180 billion in payments, but the bulk have been in merchant services and not consumer-to-consumer transfers. According to the FT article, Facebook's intent is "to become a utility in the developing world," which seems to indicate that the focus will be on consumer-to-consumer transfers at the onset of the service and not be a competitive threat to PayPal's core business.
Google has the first-mover advantage
Google has been the leader in online payments since 2011 with its Wallet app. Initially, Wallet was a holder for credit card information, offering the ability to pass information via near-field communications to registers equipped with PayPass. The company increased the functionality last May, however, when it began offering to link Wallet and Gmail accounts to transfer money from one person's Wallet to another. This could be a significant way to transfer money, considering Gmail's 425 million subscribers.
Apple seems to have the greatest mass of credit card holding accounts
Apple does not offer anything today in third-party payments, but it is laying the groundwork. On the December quarter earnings call, CEO Tim Cook said that mobile payments is an area the company is "intrigued with" and that it was "one of the thoughts behind Touch ID," the fingerprint scanner on the iPhone 5s. Although Apple has not entered the industry directly, the company has nearly 600 million accounts, according to advertising literature for iTunes Radio. If Apple decides to execute on this potential business, it could make an impact in a short time frame.
Facebook has the most users by a wide margin
Facebook dwarfs any of these services, boasting 1.2 billion monthly active users -- larger than the other three combined. The service that Facebook appears to be intending to roll out will be limited to Europe initially, but you can bet that other regions will follow. India has 100 million people on Facebook and is second only to the United States.
The one name that is missing from this equation is Amazon, but it will be following along shortly, since it also has a payments business developed for merchants. According to Macquarie Research's Ben Schachter, the company has at least 20 million Prime subscribers. The company has never officially disclosed a firm number.
The number of active adult users is critical for determining which services could be most relevant in the online-payments and financial-transfer industries. It isn't the only factor, though. You not only need to have a financial relationship with the vendor, you need to trust it with the personal information that goes hand in hand with the transactions.