Social networks, game-changer for e-money? Will social networks (e-)monetise the payments industry?

Philippe Caluwaerts, Policy Officer, Audit and Credit Rating Agencies Unit, Financial Stability, Financial Services and Capital Markets Union Directorate General, European Commission

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The idea that electronic money (e-money) could change the way in which payments are made has been around for more than a decade. Despite high initial expectations, e-money has largely remained a hype and has not reached the mass consumer market. The recent boom in social networks, connecting vast networks of customers across the globe, all seeking to ‘emonetise’ their customer base, could provide new momentum for the uptake of e-money. This paper outlines the main barriers that have limited
the uptake of e-money to date. The complex ecosystem lacking global standards and requiring enhanced collaboration between mul tiple stakeholders including financial institutions, card schemes, mobile network operators, service providers and merchants, and the sometimes fragmented regulatory regimes, all have to be addressed for e-money to be successful. This paper describes why we may be at the forefront of a breakthrough in the e-money market, driven by social networks. In particular, the uptake of electronic commerce, the boom of social networks connecting families across the globe and creating opportunities for money remittance, the active presence of merchants on social networks to advertise and sell goods online. But, next to social networks, global technology enterprises are also looking into the potential of e-money services and intend to transform the e-money and wider payments industry landscape. Consequently, traditional providers should prepare for this new environment.


social networks, electronic money, mobile money, electronic payments, money remittance, electronic wallets

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