The Week In Payments: Facebook Pay Expanding, Apple Eyes BNPL, Netflix Takes On Gaming

It was a big week for big brands in the payments space, with the common theme of getting even bigger.

According to Digital River CEO Adam Coyle, who sat down with Karen Webster for the latest edition of The Week in Payments, whether it’s Facebook Pay going off-platform, Apple’s push into BNPL or Netflix moving into digital gaming, they are all asking themselves the question: “What can I do to add value around my platform?”

“There is a change coming in the way people do business,” Coyle said. “It’s coming out of the work-from-home [trend], and that’s been very much top of mind this week,” he added, noting that how businesses emerge from the pandemic and how they adjust will have a significant impact on how and what they sell.

Facebook Pay’s Expansion

Facebook has officially announced its intention to take its payments act on the road, with plans unveiled this week to make Facebook Pay available outside its own website for the first time. The expansion will start next month with Shopify merchants, but Facebook has already made its intentions known to take its payments app to the wider world.

The move itself, Coyle noted, was expected — the part that will be interesting to watch will be whether or not consumers actually want to use Facebook Pay when shopping outside of Facebook, and how it will fit into their financially compartmentalized lives. It’s a transition that many have tried, he noted, but one that has historically proven to be more challenging than most players imagine.

“We saw the challenges that Apple Pay had early on, in getting people to try it out,” he said. “They seem to have found their niche in both brick-and-mortar and online. It’ll be interesting to see whether Facebook can make the same kind of transition in getting customers used to using a payment device or vehicle that is specific in their minds in a particular context, and then using it in another context.”

This is not an impossible mission, he noted, given the greater-than-average willingness of their core market — millennial consumers — to try out new things in a payments context. But, as Webster and Coyle agreed, these digitally native consumers still need to be given a reason to replace their established payment preferences with Facebook’s new offering. The mere fact that they can use it doesn’t mean that they will.

“It’s got to have some independent utility — otherwise, it’s just another voice in the crowd,” Coyle said.

Apple’s BNPL Play

Speaking of standing out in a crowd, the world was looking at Apple this week as it was reported that Apple Pay would soon be collaborating with Goldman Sachs to launch buy now, pay later (BNPL) functionality to its digital wallet. According to reports, consumers won’t have to sign on for the Apple Card (which coincidentally has been run by Goldman since 2019) to use the service, but they will have to apply via Apple’s digital wallet.

The move, in Coyle’s estimation, was a very smart play — even given how crowded the BNPL market is becoming, with all kinds of pure-play startups, big players like PayPal and even card issuers getting into the game. The market, he noted, will start contracting as things get even tighter — and Apple is sitting in a very strong position.

“I’m really interested to watch the buy now, pay later solutions because there’s a lot of them,” he noted. “And if we get into a point where there’s an economic downturn, will some of them start to shake out? Apple certainly has the wherewithal to be a longtime player, as it is sort of an independent utility. I think the ease with which they’ll be able to implement it will be attractive to a lot of people.”

Apple, he noted, doesn’t want to become a direct underwriter of credit — but it does want to look for partners to help provide utility in its wallet and through its devices.

“It would be interesting to know whether they think in terms of eCommerce first or if they think in terms of physical stores first,” said Coyle. “They certainly do have that franchise, and if they could bring that capability to the physical point of sale, then obviously they’re going to get a lot of traction, because generally, that can be challenging for merchants.”

Netflix Gaming Push

Also looking to leverage an enormous existing franchise this week was Netflix, which all but confirmed its entry into the world of streamed gaming with the announcement that it had hired a new gaming division head from prior roles at Facebook and EA.

It’s a necessary expansion and a natural evolution, Coyle told Webster, given the way that Netflix is increasingly defining itself as a home entertainment company that can deliver content of all kinds. What will be interesting to watch, however, will be how it changes the nature of the competition, as it will put Netflix head-to-head with some players they’re not used to competing against, such as Amazon and Apple — as well as console makers like Microsoft, Sony and Nintendo that they’ve never faced before.

“It’ll be interesting to see how successful they can be, and whether consumers want to procure that service from this particular compartment,” Coyle said. “The only caveat is that they may be a little late and may have needed to jump on this sooner, because obviously, the console providers have been very aggressive in moving people to subscription-based models for gaming.”

The gaming market is getting just as crowded as the streaming market, he added. “It remains to be seen whether or not that market will evolve to be device-specific or whether consumers want something that perhaps plays across all their devices,” he said.

In fact, that could be said of any of this week’s expansions. They all make sense in terms of offering them — but the mystery hanging over each announcement is how consumers will respond, how interested they are in changing and whether any of these new offerings and ideas are more compelling than what’s already out there.