Banks are nervous about Facebook’s new patent in Australia
Facebook just patented a peer to peer (P2P) payment messenger system that has Australian banks on their toes. While there is no guarantee that this product will actually go to the market, it still has the banks worried about the potential threat to their business.
Find out how and why creative patents such as this one bring about innovation and disrupt the market place.
Facebook's pursuit of contactless payment
The app makes it easier to split bills because users can link their debit card to the app and make and receive payments to and from their friends on Facebook, the Australian Financial Review reports. It is noteworthy that it will be hard for Facebook to make money from such technology because people people aren't going to want to pay for an app just so they can pay one another, Lance Blockley, a managing director at a payments consultancy called The Initiatives Group, explains.
If people are able to easily pay each other on Facebook, they're more likely to stay on the platform for longer.
What does Facebook get out of this payment app if they don't produce a revenue stream? Most of all, they get customer loyalty. If people are able to easily pay each other on Facebook, they're more likely to stay on the platform for longer. Plus, data is becoming a more valuable resource for advertising reasons and Facebook can gain knowledge about their customers from these transactions.
Facebook has been doing P2P payments in the U.S. since 2015, but the patent was processed in Australia in May of this year, according to the Australian Patent Office's documents.
Why are the banks so threatened by this new patent?
First and foremost, the banks are opposed to this patent because it threatens their ability to recover their recent $1 billion investment in a new system called the New Payments Platform (NPP). This also allows customers to make and receive instant payments using a "PayID" instead of a BSB number. The Australian banks would be competing with Facebook if the social media giant's patent is realised.
In addition, the banks are threatened by the idea that Facebook could take away their engagement with customers.
"Their concerns will be around losing touch with their customers, and being pushed down the value chain from the primary interface. It is an engagement issue," Mr Blockley explains.
If Facebook becomes the primary way for people to pay each other, the banks will only become distanced from customers and become more "utility-like" in their function, according to the Australian Financial Review.
Patents are intended to bring about innovation and add to the customer experience, but such market disruption can lessen competitors' value to customers. If you want help formulating your patent application for your innovative idea, don't hesitate to reach out to Alder IP. Our lawyers have in-depth knowledge on how to create successful patent applications.