Facebook Inc, Twitter Inc and MasterCard Inc: Is There a Potential for Collaboration? (FB TWTR MA)

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Twitter Inc (TWTR) has been enjoying a good week, with its stock up by over 5% since the start of the week. The rally so far this week has helped reduce its year-to-date loss to the region of 27%, compared to the 31% loss in TWTR stock price as of the end of last week.

Facebook Inc, Twitter Inc And MasterCard Inc: Is There A Potential For Collaboration? (FB TWTR MA)The rally has coincided with comments from Mastercard Inc’s (MA) president of international markets at the Money 2020 fintech conference in Copenhagen on Monday that the financial services firm would be interested in working with social media giants Facebook Inc (FB) and Twitter.

Housekeeping matters first: neither FB nor TWTR has announced anything to that effect. But there’s certainly a huge potential here, if either of these companies would consider working with MasterCard.

To that end, I’ll quickly take you through how such partnerships could help both FB and TWTR.

MasterCard Could Help Build Social Commerce

FB once integrated Payvment to help facilitate ecommerce on the Facebook platform, but it failed. It’s easy to think that it failed then because people wouldn’t shop where they socialize.

But the story was way beyond that. The summary of it all is that the FB commerce surfaced ahead of its time. At the time it was launched, the mobile revolution hadn’t occurred, so when the mobile revolution came along, most resources were directed towards mobile, making the commerce division suffer, according to Payvment’s founder, Christian Taylor.

As Taylor said, now that mobile is well established, the commerce program can perform. And FB is already working towards that. Last summer, FB started testing features that integrate shops into FB pages — and this time, it works well on mobile. The feature will also include “buy” buttons that allow for complete in-app shopping.

For such a system to work seamlessly, FB will have to integrate a secured payment system, similar to Apple Pay and Android Pay. And as with Apple and Android Pay, FB will need to collaborate with a payment solution firm to execute transactions.

Moreover, the new FB peer-to-peer payment ecosystem would also stand a chance of making it over the long haul if such a partnership were to be reached.

Apart from the ecommerce aspect, such partnership could make Facebook a place where professional mentors and training companies host their programs. You’ can see there is a potential for this when you consider that some paid Mastermind groups are hosted on FB.

If FB has a payment system, which would likely evolve from a Facebook-MasterCard partnership, many training professionals who don’t host their programs on FB could come on board, thereby, increasing Facebook’s revenue sources.

Such a system also has a potential of helping Facebook stock generate more sales of hardware, like the Oculus Rift.

How Twitter and MasterCard Would Work

Twitter stock launched the “Buy Now” button in the U.S. last year September, in a bid to remove the friction that’s currently an issue in mobile purchasing. TWTR already has partnerships with Best Buy Co Inc (BBY), Pacific Sunwear of California, Inc. (PSUN) to sell on Twitter. TWTR is also working with ecommerce platforms — including Shopify, Demandware and Bigcommerce — to make it easy for businesses that sell through these platforms to integrate their ecommerce business with TWTR.

The opportunity here is obvious, and a partnership with MasterCard could make users feel safer shopping on Twitter. If TWTR makes it successful, this will give its top line a boost.

Takeaway for FB, TWTR

Of the two social media giants, FB is better positioned to make such a partnership work well for its business. It’s not rocket science. FB has a larger user base (in the region of 1.5 billion) to sell to, compared to Twitter’s 320 million users.

Even worse for Twitter is the fact that its user growth metric isn’t good enough.

That is, good as such partnership would be, Twitter’s system already undercuts itself. FB, on the other hand, could use this to continue fulfilling its dream of connecting the world.

Still, all of the MasterCard partnership talks aside, FB presents a more compelling investment thesis than TWTR.

As of this writing, Craig Adeyanju did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/04/fb-ma-twtr-collaboration/.

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