Facebook Poaches PayPal President David Marcus To Run Messenger, Maybe Monetize It With Payments

Facebook doesn’t show ads in Messenger or WhatsApp. Instead, payments could be the key to earning money on chat, especially in the developing world where ad rates are low. If that’s the strategy, Facebook just got the perfect executive to lead the charge. It’s poached PayPal’s president David Marcus to run its Messenger unit.

Facebook hinted that Marcus would be looking outside of ads for how to make money on Messenger, writing in its announcement of the hire that “David is a widely respected leader in the technology industry with a track record of building great products and finding creative ways to turn them into great businesses.”

Facebook has previously said that it wants its standalone apps to hit at least 100 million users before it starts monetizing them. Messenger now has 200 million users and recent acquisition WhatsApp has 500 million, so they’re both definitely eligible. Both have been focusing on growth and box out the competition in the heated messaging space. But since monetization plans can take a while to get mapped out and then revved up, it’s smart for Facebook to start thinking about this now.

Facebook has already made some forays into the payments space. The Financial Times reported in April that Facebook had applied for an e-money license in Ireland that let it handle peer to peer money transfers in Europe.

Using Marcus’ expertise could one day help Facebook earn significant revenue from developing nations and the parts of the world it’s trying to connect to the web through Internet.org. In these markets, buying power is smaller in absolute terms because of lower currency values, cost of living, and more modest incomes of citizens. This makes it tough to earn serious revenue from ads.

But one thing people do spend money on in the developing world is on the fees for payments and remittance. Mobile payments for digital and physical goods are becoming more popular in developing nations. Meanwhile, many migrants send money they earn back to family members in their home country, but are forced to endure extortionary fees. Facebook could use the ubiquity of its mobile apps, including Messenger and WhatsApp, to disrupt the current players in mobile payments and remmitance, earning those fees for itself.

More to come