Forget sharing photos. Mark Zuckerberg may soon manage your finances
Fall behind in the game FarmVille and the poor crops inside your Facebook window wither. Remedies include biplanes or rejuvenating your "farm coins," but if you're out of those, there's another solution: Buy Facebook Credits with cold, hard cash. Nongamers may have missed Facebook's clever foray into the world of "virtual currency," where Facebook Credits cost 10 cents each and can be exchanged for game points or cartoony gifts. Those dimes are adding up—the U.S. market for virtual goods will reach $2.1 billion in 2011, according to research firm Inside Network. Facebook's currency, while just part of that market, is getting real. You can now purchase gift cards for Facebook Credits at Wal-Mart (WMT), Target (TGT), and Best Buy (BBY). So why couldn't Facebook use them as real currency, too? In fact, why couldn't Facebook become your bank? Money Is A-Changing
At first blush, this seems like a crazy idea. Facebook would need to overcome consumer privacy concerns, expand its Credits into a payment system that works everywhere, and surmount regulatory hurdles to handle businesses such as deposits and mortgage servicing. Crazy, until you realize how smartphones are changing the world of money. Jack Dorsey, co-creator of Twitter, started Square in 2009 to help local merchants accept credit cards with iPhones. AT&T (T), T-Mobile, and Verizon (VZ) have formed Isis to turn smartphones into mobile wallets. And American Express (AXP) launched Serve on Mar. 28 to link checking accounts, credit cards, or debit cards to phones and computers. All of this interest is spurred by fees—billions of dollars in the global payments industry that now flow to Visa (V), MasterCard (MA), and American Express. Every time you swipe a credit card, the merchant must pay a few percentage points to the credit firm. Change card processor, and all those fees could go somewhere else. PayPal did exactly this on the Web about a decade ago, when it pioneered a simpler way for eBay (EBAY) users to transfer funds securely; PayPal now has 94 million active accounts and is nearing $4 billion in annual revenue from $92 billion in PayPal transactions—about 18 percent of all global e-commerce. The next payment platform is no farther than that glass gadget in your pocket. Move Over, PayPal
Becoming a financial powerhouse would help Facebook avoid the fate of many once-popular networks. Prodigy, AOL (AOL), Friendster, Second Life, and MySpace (NWS) all dreamed of growing forever, too. To survive, Facebook must become more than glorified e-mail. Sharing photos and gossip with friends might make Facebook hard to leave. But upload your checking account and Facebook may just be forever.