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Facebook Eyes Payments Market

IPO to fund investments in payments system and apps partnerships.

Facebook intends to make a bigger play in the digital payments market following its planned IPO, which was officially announced Wednesday.

In its S-1 registration statement filed with the SEC, Facebook said it plans to invest more heavily to promote Facebook as a platform for third-party social products, and will enhance its payments system to support the move beyond virtual goods.

According to the filing, “substantially all” of Facebook’s payments revenue is from virtual goods used in social games. However, the company “may seek to expand the use of payments to other types of apps in the future.” To that end, Facebook has already applied for “certain money transmitter licenses” and expects to apply for additional licenses in the U.S.

“[We] plan to invest in enhancing our payments offerings and in making the payments experience on Facebook as convenient as possible for users and platform developers,” the filing states.

In 2011, $557 million of Facebook’s $3.7 billion revenue came from payments and fees. While that’s just 15 percent of total revenue, it is a more than five-times increase from payment revenue in 2010.

About the author

Crista Souza
Crista Souza is founding editor of TheOnlineSeller.com. A journalism graduate of San Jose State University, she spent 13 years as a business and technology reporter in Silicon Valley. Crista has been writing about B2C and C2C ecommerce since 2008. Opinions expressed here may not be shared by The Online Seller and/or its principals.



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