Facebook is preparing a money transfer service in Europe that would allow it to compete with the likes of Western Union, while giving users the option of storing money with the social network or buying items online. The US tech firm is seeking regulatory approval in its European base in Ireland for "e-money" status, which would see it issue digital credits that can be converted into cash by recipients.

The firm already has permission for some forms of money transfer in the US, which allow payments within apps, including the Candy Crush Saga and Farmville games, from which Facebook takes a 30% cut. The company facilitated $2.1bn (£1.3bn) in transactions across Facebook in 2013, primarily to games publishers. Approval in Ireland would allow Facebook to operate an e-money service throughout Europe using "passporting", which allows digital payments to be used across EU member states without having to gain regulatory approval from each one.

"For remittance alone the market is worth around $500bn, according to the World Bank, but for money moved between developed nations, as well as between developed and developing individuals and business, the market is valued at an estimated $5tn to $10tn, based on our analysis of global money flow data.""Facebook has a lot of ambition here and they certainly see the benefits of helping the next 2 billion people make it on to the internet, which they're happy to subsidise for a while, but at some point they have to become paying customers.""Payment schemes are the equivalent to credit cards in emerging markets and here is where Facebook can make progress … especially in those places where banking infrastructure is not as mature as it is in Europe or the US," said Blau.