If Irish regulators approve Facebook’s application, the company will be able to issue units of stored monetary value that represent claims against the company. Facebook would be required to hold capital of €350,000 and segregate funds that are equal to the amount of money it has issued. Facebook already has permission to process payments in the United States for in-app charges.
Processing money transfers appears to be a significant battleground for the big Internet players. eBay Inc. (NASDAQ: EBAY) holds a commanding position with its PayPal service, but Google Inc. (NASDAQ: GOOG) also is looking to expand beyond in-app payments and has been authorized to issue electronic money in the United Kingdom in much the same way that Facebook is seeking to receive authorization for in Ireland.
The main thrust of these payment schemes is aimed at filling a perceived gap in the services offered by traditional banks, which have neglected the potential for this transfer service as they try to figure out ways to deal with new regulatory demands that resulted from the financial meltdown of 2009. Facebook and Google also have reach advantages over PayPal, but it remains to be seen if they can capitalize on that. Both have come under fire for their handling of user data, and that may be a hurdle that is difficult to overcome.
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