You may not realize it, but the game playing, ad-serving, stalker-friendly site called Facebook has long busted out of it’s walled garden and moved into the “real world” in a very big way. And it is having profound implications for government, other businesses, and each of us as individuals.

Unless you were living in a cave for the last few years, you probably know all about Facebook. It’s an ad-supported social network that allows individuals to connect with friends, share photos, status, games, and support groups and organizations by “liking” them.

The first step in Facebook’s evolution occurred  when they developed some clever code that allowed webmasters to put “Like” buttons throughout their site. By clicking on the embedded button, we each became complicit in a process that helped Facebook not just reach out to these other sites, but to actually embed this external content within Facebook itself. This isn’t a particularly bad thing – in fact, it is a win-win-win proposition, but it accomplishes a strategic goal for Facebook that isn’t apparent to most. More on this later.

The second step has been to offer site owners (and their users) another clever nugget of functionality: the ability for users to logon/register on third party sites with their Facebook ID’s. Again, a win-win-win proposition, and one that accomplishes a strategic goal: to develop a network of external sites who are comfortably dependent on Facebook, and whose developers feel very comfortable using Facebook-embedded code.

Facebook is also interested in getting into the payments game.  They tried implementing a virtual currency – Facebook Credits – but were ultimately unsuccessful, and ended up cancelling them.  And they are trying again to do so again with their “Diem” (which was rebranded from “Libra) cryptocurrency.  The jury is out as to whether this will be successful or not, but it is clear that Facebook wants to control a currency, and it has the scale to at least try.  My view: Facebook Credits – or Diem – or something else – will eventually make an appearance on the platform, and it will be transformational. For the rest of this article, I’ll use the word “Credits” to represent whatever currency system Facebook eventually settles on.

Consider these factors:

1. Website owners “trust” Facebook – a trust earned through the “like” button and the Login with Facebook functionality
2. Web developers are comfortable implementing Facebook code
3. Users mostly trust Facebook, and will want to spend what they have earned.

More than these three factors, however, is a fourth: It’s in everyone’s commercial interest to have this happen as quickly as possible. For web merchants, it makes it easier and faster to transact, resulting in higher sales at a lower cost. Users will want to spend their credits they have earned, and Facebook will be able to open a new channel of revenue: transaction fees.

What is even more exciting, at least from Facebook’s perspective, is that the web is just the beginning. Why be content with hundreds of thousands of web merchants, when there are millions of bricks and mortar businesses who would jump to lower transaction fees in a second. As Visa and MasterCard processing fees have risen substantially, there is a window of opportunity for an organization that’s big enough to offer an alternative. Facebook is. And of course, if these merchants are already accepting Facebook credits on their websites, it’s just a simple step to accept them in the real world.  Especially, when Diem’s wallet can also hold government-backed currencies, (including central bank digital currencies) not just the Diem token.)

But how might these payments be delivered? This is but a detail, but there are some obvious possibilities, such as a new “credit card”. What is more likely is that the payment will be delivered through the next generation of cellphones, with built-in Near Field Communications. Picture this: log into your Facebook Mobile App (which has a version of their Calibra wallet embedded) on your Smartphone; then “tap tap” the phone on a pad at the retailers, and the Facebook credits are transferred immediately to the retailer. Of course, the retailer can just “bank” the credits (less the transaction fee)… or they can recycle the credits within the Facebook ecosystem to pay for more advertising. Facebook might even cut them a deal.

The big question is how will the other big players respond?  Who – if any – might have a vision this big? Unfortunately for the 500+ other sites, only Google and Apple might be up for the challenge…and even they might be found wanting.

Will Facebook take over the world? Not in a traditional sense. But if this analysis is right, they will come close.

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