Update: Facebook’s new payments test isn’t a PayPal competitor, it’s a companion that fills in your billing info automatically. AllThingsD today broke the news that Facebook was testing a new payments feature for third-party apps, but misframed it as a PayPal competitor and lacked details of how it actually works.
The test lets users fill in their credit card and billing info when making payments through third-party mobile apps. Facebook pulls the information from data on file for users who’ve purchased Facebook Gifts or made in-game purchases on Facebook. After granting permission, filling in the info takes only a few clicks, rather than arduous mobile typing.
Facebook is not becoming a payments processor here and therefore can’t replace PayPal. Payments made via this test still go through an ecommerce app’s regular payment processor, such as PayPal, Braintree, or Stripe, and they still earn their fee.
Facebook instead benefits by getting info about whether Facebook ad clicks lead to sales. This helps it prove it delivers ROI to advertisers, persuading them to buy more ads. It also endears developers to the Facebook platform, and could even speed up purchases of ads they buy on Facebook.
For the full information, read our story “Facebook Payments Test Isn’t A PayPal Competitor, It’s A Companion That Fills In Billing Info”
Below is the body of this article as it was originally published with the most erroneous parts crossed out.
going to be a means of payment for purchasing stuff via mobile e-commerce apps, according to a new report from AllThingsD. The social network will offer mobile shoppers the ability to pay with Facebook via their login credentials the same way that we currently do with PayPal. The pilot, which launches sometime roughly in the next month per ATD, will feature JackThreads, the male-oriented purveyor of deals on clothes and accessories.
Users have credit card details on file with Facebook already for purchasing Facebook Credits and giving Facebook Gifts, and those users would be able to use those same stored payment methods
to purchase real-world goods and services from mobile apps without having to re-enter their credit card information with this project. Basically, it’s a mobile-specific PayPal competitor that could also help Facebook gather lots more insight around its member’s purchasing habits and e-commerce intent.
As with most of its new features, Facebook appears to be opting for a quiet, gradual rollout to test the waters and see how users react before offering it up to a wider swath of partners. There’s reason to be skeptical of this kind of endeavor panning out, too: as Forrester Research’s Sucharita Mulpuru told ATD, it’s likely Facebook has only a small percentage of its users’ credit card information on file, and people don’t seem eager to trust FB or other social networks with their financial information.
People do seem to trust their information with PayPal, however, owing to its long-established nature, and players like Apple who have an astronomical amount of user credit card details on file via iTunes. Apple hasn’t shown any interest yet in solving this kind of problem by becoming a general-purpose PayPal alternative, but it’s fair to say it would be in a better position to do so should it choose to go down that road.
Facebook branching out
into this kind of payments isn’t surprising giving its Facebook Gifts and Facebook in-game virtual goods purchasing endeavors, which show a clear desire on the part of the social network to not only facilitate e-commerce but also to add information resulting from those transactions to its ballooning social graph. Whether the pilot is as appealing to users as it is to FB remains to be seen.
We’ve contacted Facebook for more and will update if the provide additional comment.