August 15, 2013
Facebook Wants A Piece Of PayPal’s Pie
Michael Harper for redOrbit.com - Your Universe Online
Continuing their push to get involved in every interaction that takes place on the Internet, Facebook may soon roll out their own payment product to compete with PayPal. According to an exclusive report by All Things D's Jason Del Rey and Mike Issac, the social behemoth wants users to buy things through mobile apps using their Facebook logins as identification.Sources speaking with All Things D explained a system which works similarly to PayPal. Users who entrust their credit card information and shopping history with Facebook will be able to enter their login credentials to make purchases through partnering mobile apps rather than enter their billing details on several apps. JackThreads, purveyor of young men's clothing, is said to be the first partner working with Facebook to roll out this new payment system. Facebook has confirmed to All Things D that they are testing this new system and could launch it in a matter of months.
“It sounds like a dead-on competitor of PayPal,” explained Forrester Research analyst Sucharita Mulpuru when told about Facebook’s plans.
For their part, PayPal told All Things D they have a “great relationship” with Facebook and don’t expect it to end soon. What’s more, they believe their history in mobile payments will protect them if Facebook does enter this market.
“We’ve been investing in mobile payments since 2006, and last year 10 percent of our total payment volume — $14 billion — was from mobile devices. However, we always welcome competition and are looking forward to seeing what Facebook will announce.”
Facebook may be gunning for a slice of PayPal's pie with their latest product, but the mobile payment game doesn’t belong to them alone. Google, for instance, has been trying to get a share of the mobile payment market with their Wallet offering for over two years.
While Google's Wallet is more focused on handling mobile payments vie NFC, they've also released APIs for developers of mobile shopping apps to write Wallet compatibility directly into the app. Google Wallet users give their payment information to Google and only need to provide their password when shopping with partnering sites. Facebook's new system will work in much the same way.
This raises some immediate questions, however. Facebook has often been chided for bungling their privacy controls and aggressively pushing the boundaries of their terms of service. If users have reservations about sharing even their birthdays, they may be even less enthusiastic to share their credit card numbers, even if it would allow for easy mobile payments.
“Nobody trusts social networks with their financial information, and they are certainly not going to trust Facebook,” said Mulpuru in his interview with All Things D. "Maybe they have a few million people that have bought something on things like FarmVille,, but that does not a network make."
However, the social behemoth is already accustomed to getting money from their users beyond the relatively paltry sums paid for online social gaming. Users have also been able to buy "stickers" or "gifts" and give them to their friends through the network. And last October Facebook announced "Collections," a new shopping site which was said to combine the better aspects of Pinterest and The Fancy.