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Facebook Testing Mobile Payments Service

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Facebook Testing Mobile Payments Service

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Facebook is testing a new online mobile payments service feature for third-party mobile apps. Facebook claims early testing of a system that stores credit card data and then charges transactions with PayPal or other providers on third-party mobile apps. Facebook is testing the payments system with ecommerce company JackThreads.

But Facebook is not going to actually conduct the payment transactions, the social networking giant said in a prepared statement. It will use third parties, including PayPal, Stripe or Braintree for that. Facebook will only store the credit card numbers that people have used before for making purchases with Facebook Gifts, or games on Facebook. The idea would be to make it easier for people to make payments on third party mobile apps by clicking a Facebook button, instead of having to enter a credit card number. That would also help Facebook’s ad business because advertisers would see higher conversions if payments are easier to transact.

 

“We are working on a very small test that gives people the option to use their payment information already stored on Facebook to populate the payment form when they make a purchase in a mobile app. The app then processes and completes the payment. The test is designed to make it easier and faster for people to make a purchase in a mobile app by simply pre-populating your payment information.  It will be a very small test with 1-2 partners. Additionally, this test does not involve moving the payment processing away from an app’s current payments provider, such as Paypal.  We continue to have a great relationship  with our payment processing partners, and this product is simply to test how we can help apps provide a simpler commerce experience.”

One long-term potential of this moves Facebook closer to being a comprehensive portable digital identity for people wherever they go. Consumers already use Facebook to log-in to a variety of websites and apps to verify their identities. In some cases this is just for an easier log-in and to find friends you know, and in others it serves a deeper purpose, like proving on Airbnb that you are not a serial killer to others who may stay in your home. Facebook log-in also brings with it advertising opportunities to third-party sites and apps.

Facebook has had a number of payments products over the years. Last year, Facebook moved away from its Facebook Credits virtual currency because developers often had their own currencies. Facebook recently has been building out its Facebook Gifts product, which lets users send real-world gifts from Facebook. It also notifies people when it is their friends’ birthdays and suggests sending them a gift, rather than just posting a birthday message on their Facebook walls.

Forrester Research analyst Denee Carrington thinks Facebook will face a challenge in offering mobile payments even though the company has been building up its database of users’ credit cards.

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Hitesh Arora
Hitesh Arora
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