When Mark Zuckerberg says “we don’t view ourselves as a payments business,” he’s not kidding.
Facebook’s payments revenue has been on decline since the end of 2012. This compares to, well, crazy-massive growth in advertising revenue at the social network. As a point of comparison, year-over-year advertising revenue grew 57% to more than $5.8 billion. In total, 97% of Facebook’s revenue now comes from advertising.
Facebook is still pitching its payments future as being wrapped up in Messenger, which last quarter began offering debit card-only payments functionality within the messaging app, a standalone from Facebook’s mobile platform. Here’s how Zuckerberg described Facebook’s payments strategy yesterday
during the company’s earnings call:
On payments, the basic strategy that we have is to make it especially in products like Messenger that where the business interaction maybe a bit more transactional, to take all the friction out of making the transactions that you need. So, we don’t view ourselves as a payments business, that’s not the type of company that we are. We’ll partner with everyone who does payment. We look at the stuff that Apple is doing with Apple Pay for example as a really neat innovation in the space that takes a lot of friction out of transactions as well. And our view is that the less friction, the better the user experience, the more people can easily interact with businesses that they care about. And ultimately for our business that will drive up the amount that businesses are willing to pay to advertise to send people into those interactions because they perform well. So it’s good for everyone but that’s how we think about that.
Well, sort of. The core payments revenue decline was blamed on a “reduction in payments revenue related to games played on personal computers.” Clearly, the payments functionality in Messenger did not make up for “games played on personal computers.” Messenger payments are free to consumers.
Look, Facebook still reigns supreme in active users. Facebook has 1.04 billion daily active users, and its Whatsapp unit has more than 1 billion, too. Numbers like that stagger — and, in fact, they make the company’s decline in payments all the more perplexing.