Facebook Friends Get a New Benefit: Now You Can Send Each Other Money
The most precious of holiday cards -- the one shaped like a $20 bill, with a peekaboo cutout for the president's face -- may be a thing of the past. Now you can just post a virtual $20 bill on a friend's Facebook wall to say Happy Holidays this year. Or send money to your kids in college -- instantly.
In a joint effort with PayPal, the social media giant launched a new app this week called Send Money that could remake the money-transfer business. While a number of so-called peer-to-peer payment systems already exist, the new app offers a seamless money transfer system between Facebook friends -- and captures Facebook's more than 800 million users.
I took the new app for a test drive. On Thursday, I sent my sister $5 to say "Thanks for being a great sibling!" While I have a PayPal login, I don't keep actual funds in a PayPal account, so I used PayPal to make a payment via my credit card.
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That's when I saw a little catch to Facebook's new app: My $5 gift had turned into $5.45 expenditure. PayPal charges a premium of 2.9% of the transfer amount, plus 30 cents, which is the same fee that PayPal also charges on its website. But for $5 gift sent from New York to Philadelphia, it's only a penny more than sending a fiver through the mail in a stamped envelope. And a whole lot cheaper than Fedexing a check or using Western Union, where an instant money transfer of $5 comes with a $5 fee -- and higher sums as the amount being sent rises.
But if you fund the transfer directly from your bank account, or with money that is kept in a PayPal account it can be sent for free. And PayPal cash can be used for currencies in 65 countries.
The turnaround time beat snail mail by a long shot: After I made the payment, my sister reported getting a link for the gift in less than two minutes. She logged into PayPal, where the prompts directed her to withdraw the money from PayPal and transfer it to her bank account. Recipients can also request a paper check.
One disconcerting part of the payment transfer: The email receipt for my payment showed $5, not the actual $5.45 that was debited from my credit card.
Catherine New can be reached at catherine.new@huffingtonpost.com.
