Facebook has confirmed it is planning to test out a new mobile payments solution that would allow users of the social networking site to make purchases on other mobile apps using their login information for the site.
The firm confirmed to AllThingsD that a test will be launching in the “next month or so” after sources close to Facebook told of the new plans.
Facebook’s product would permit shoppers that have previously used their credit card on the social network to complete purchases on partner sites without the need to re-enter billing information at the checkout.
JackThreads, a flash-sale shopping site for men, is partnering with Facebook for the pilot scheme due to their strong ties with the social networking site and most of their sales coming on mobile devices. They also, according to AllThingsD, have a “decent demographic overlap with one particular segment of Facebook users – gamers – who would have provided the social network with credit card information”.
Some observers are of the belief that this will pit Facebook in a mobile payments battle with PayPal, Sucharita Mulpuru, a retail analyst at Forrester Research telling AllThingsD that it “sounds like a dead-on competitor of PayPal”. PayPal, meanwhile, is eagerly anticipating what Facebook has to offer.
“We have a great relationship with Facebook and expect that to continue. Our customers love using PayPal on Facebook. 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,” a company spokesperson said.
One of the main problems that could hinder Facebook is the fact that a proportion of internet users won’t trust a social network with their financial information.
“Nobody trusts social networks with their financial information, and they are certainly not going to trust Facebook. Maybe they have a few million people that have bought something on things like FarmVille, but that does not a network make,” Mulpuru added.