Facebook adds a payments feature to its Messenger app

SAN FRANCISCO -- Facebook's instant messaging service isn't just for sending smiley faces and photos anymore. Now you can use it to send money instantly to your friends.

Facebook, the social networking company, announced Tuesday that U.S. users of its Messenger app would be able to link their debit cards to the service and use it to message money to one another just as easily as they send a snapshot or text.

Given Facebook's huge size and reach, the introduction of its payments feature -- which has been highly anticipated by Wall Street -- is likely to cause tremors in the nascent market for instantly sending money to individuals, known as peer-to-peer payments.

WeChat, which is essentially the Facebook of China, and other Asia-based communications services like Alipay already allow their hundreds of millions of users to send money via instant message. But the technology is only beginning to appear in the United States, where email payment services like PayPal have long been more popular.

As messaging has begun to eclipse email as the preferred form of electronic communication, especially among younger users, Facebook has sought to dominate that market much as it dominates social networking.

The company's Messenger app is one of the larg

est platforms in the world, with more than 500 million monthly users. And last year, Facebook spent nearly $22 billion to buy WhatsApp, a separate messaging platform that now counts more than 700 million active users globally.

In the United States, a host of peer-to-peer money transfer services have emerged and are trying to capture the wallets of messaging enthusiasts.

Venmo, a mobile payments app owned by eBay's PayPal unit, is perhaps the most direct competitor to Facebook's new offering. Popular with young users, it is not just a payment system but a social network that allows users to post public or private messages about what the money is for.

Square, the e-commerce startup, offers a similar app that allows payments to individuals by email. And Snapchat, the startup known for its disappearing messages, also allows users to send cash to one another through a partnership with Square.

With its service, Facebook wanted to simplify the process as much as possible, according to Steve Davis, the product manager in charge of the project.

"We know that conversations about money are happening all the time," he said in an interview. "But most conversations begin in one place and end in another place."

Facebook wanted to keep the payment and the conversation in one message thread that would also serve as a record. So right next to the thumbs-up button on the Messenger screen will be a dollar-sign icon to send money. If a debit card number is already saved in the app, you can send money to the other person in the conversation by clicking the dollar sign and entering an amount. The whole conversation will be saved for later reference.

By using debit cards to handle the transfer, the money can move fairly quickly between the two bank accounts while allowing Facebook to offer the service free of any charges to users. Unlike PayPal or Venmo, "you don't have to remember to withdraw the funds later," Davis said.

As with most new Facebook features, the Messenger payments button will be gradually rolled out to U.S. Messenger users over the next few months and will be available on mobile apps as well as the web version.

Wall Street is anticipating that advertising and business transactions through messaging will eventually be big businesses for Facebook. Mark Zuckerberg, Facebook's chief executive, agrees.

"I'm a big fundamental believer that these are going to be very big contributors to our businesses over time, but we just have to do it right," he said in a conference call in January to discuss the company's financial results.

This story was originally published March 18, 2015 at 12:00 AM.