For New Payments Strategy, Facebook Turns to Old Focus

Facebook's Deb Liu speaks at this year's Money 2020 conference in Las Vegas. Source: Facebook.
Facebook's Deb Liu speaks at this year's Money 2020 conference in Las Vegas. Source: Facebook.

As more companies jostle for a piece of the payments pie, Facebook has decided on an unlikely strategy: win by giving in.

Visa and MasterCard are so dominant in payments that new entrants have struggled to compete. Most players piggyback on the credit card processors’ network. They typically charge merchants fees in addition to those levied by the card companies, and that has made it hard for them to gain traction.

Facebook’s new strategy, which has gone largely unnoticed, forgoes being a transactions middleman in favor of leveraging the site’s strength, connecting people, in this case merchants and shoppers.

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Tech companies often stick with the strategy that made them successful in the first place, and Facebook’s stock price suggests that investors accept, for now, the advertising-centric business model. But lack of diversification can limit the ability to survive and thrive, especially if tech's fast-changing landscape makes an original big idea obsolete. Discerning investors should be watching to see if Facebook can come up with a new Plan B to take the place of payments.


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