Since Facebook announced the “privacy pivot“, to deepen user privacy by mining and monetizing lesser of user data, it is evident that its trajectory will go through payments and ecommerce. As that happens, fintechs will meet a super-competitor in the space especially in the developing world. Everyone is already aware that WhatsApp will be monetized via payment – WhatsApp on payment will be amazingly appealing to merchants and users even as fintech and financial institutions may experience dislocations. Also, as this pivot happens, local logistics companies may benefit: Facebook will need them to thrive in any ecommerce operation since logistics involves physical domains.
Facebook Inc.’s latest shift toward private messaging, payments and e-commerce echoes the footsteps of WeChat, China’s social networking super app that many Chinese find indispensable.
After Facebook Chief Executive Mark Zuckerberg said in a blog post that the social media powerhouse that encourages public sharing sees its future in encrypted messaging, payments and other services, the similarities were striking to many Chinese.
Using the smiling curve, most banks may become dumb terminals for WhatsApp payment if they remain at the center. They must learn to find ways to compete by moving to the edges of the curve. Today, Facebook is transitioning into a post-invasive-data-mining business, and that means payments and marketplace ecommerce must compensate for the revenue losses in advertising. Local businesses will benefit but regional and national payments may struggle in most markets.
When Geopoll noted that Facebook has become the second largest ecommerce platform in Africa, after Jumia, many were surprised. But in reality, it should not be that hard to see: Facebook is a planet and any ecommerce company can only get a subset of that planet. In other words, most ecommerce players are only going to lure a small segment of the Facebook users to its platform. And that would require a lot of work. So, if Facebook makes it easier for people to buy and sell, it would dominate the category without a lot of efforts.
That explains why the news that WhatsApp has added payment in its services in India should concern many fintech players (and banks) in Nigeria. India is always a test ecosystem for the developing market. Once perfected, in India, I expect WhatsApp to launch the product in other places including Africa.