Facebook is reportedly weeks away from obtaining approval in Ireland for providing remittances and e-money.
Facebook would then be authorized by Ireland’s central bank as an e-money institution, allowing users to store money in their accounts and make payments to other users. The money is thus “backed” by Facebook, entitling users to obligate the company for their funds as they would from a conventional financial institution. The e-money would be valid throughout Europe through a “passporting” process.
The approval requires minimum capital holdings of 350,000 euros and that client funds remain segregated in a separate account from the company’s. Overall, the requirements are more lenient and straightforward than in the U.S., where individual licensing can be required from each state.
Facebook has also reportedly held discussions with several online and mobile payment companies over potential partnerships. These include London-based Azimo, TransferWise and Moni Technologiies. With Azimo, Facebook reportedly offered $10 million to recruit one of its founders to head business development.
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Facebook makes most of its money through advertising, but has reportedly gotten 10% of its revenues through facilitating $2.1 billion in money transfers, some forms of which it is already authorized for in the U.S. The company reportedly charged as much as 30 percent on such transactions, which were almost exclusively for gaming purposes.
The company is thus further entrenching itself in Ireland, making for itself an international headquarters of sorts. Other technology giants like Google, Linkedin and Amazon have also designated operations in Ireland and other countries with easier-to-manage regulatory environments.
Particularly advantageous is the tax structure in such countries. By officially designating operations at certain offices, the companies have managed to save billions in taxes, to the chagrin of tax authorities in the U.S.
One can speculate that the next generation of Facebook’s e-money can take the form of an internal electronic currency. This would be somewhat comparable to Hub Culture’s Ven, only on a much grander scale. At this point however, it looks like Facebook has spoken clearly that it is not interested in pursuing the cryptographic route.