How Mark Zuckerberg plans to make money with Facebook Pay

Facebook, one of the world’s most valuable and profitable advertising companies (it also runs a social network), is making a major push into payments. But even as it drives deeper into commerce and digital transactions, Facebook is likely to rely on ads as its main money-maker for the foreseeable future.

The company formally announced Facebook Pay yesterday, a unified service for payment offerings across its family of apps, including WhatsApp, Instagram, and Messenger. It supports major credit and debit cards, as well as PayPal, and transactions are processed by partners like Stripe. Facebook Pay uses traditional financial channels and is separate from its Libra cryptocurrency project, which has hit a wall of regulatory resistance around the world.

Diversification makes sense for Facebook CEO Mark Zuckerberg. His $550 billion social network is almost entirely dependent on ads to make money, as around 98% of its $56 billion of revenue last year came from advertising. This contrasts with Tencent, a tech giant in China that runs a dominant social network, which produces substantial revenue from things like payments, financial services, and gaming. Ads account for about 20% of the Chinese company’s quarterly sales.

In April, Zuckerberg told analysts that there’s a “continuous spectrum” between advertising and commerce. The company is adding features and tools around shopping for Instagram and Marketplace for Facebook. He said he expects products that make it easier to buy directly from the platform will make it more valuable to business users. “Therefore, that will translate into higher bids for the advertising,” he said.

Source: https://qz.com/1747712/how-zuckerberg-plans-to-make-money-with-facebook-pay/