Facebook is planning to introduce a new mobile payment system that will allow users to purchase products off Facebook on partnering e-commerce mobile apps.
Facebook is turning its social networking site into a more secure place for making purchases from users' login on e-commerce mobile apps. After making several changes to the site, including the addition of VIP app for celebrities, acquiring Voice Recognition and Speech Translation Developer 'Mobile Technologies', introducing TV listing and restaurant reservations from within the mobile app and adding Graph Search for U.S. English, Facebook now plans to roll out a new mobile payment system for e-commerce.
Facebook's untiring efforts to make the social networking site a better place for its members have seen no breaks. The new product, which is currently in a testing phase, is likely to be rolled-out to all users by next month. For the new payment system, Facebook did not choose PayPal and claims not to move the "payment processing system away from an app's current payment provider, such as PayPal," Facebook told AllThingsD in a statement. In fact, the social networking site chose JackThreads, a flash-sale shopping site for young men, as its pilot partner.
"We continue to have a great relationship with PayPal, and this product is simply to test how we can help our app partners provide a simpler commerce experience," Facebook added.
Facebook promised its sole focus is to simplify mobile purchases and challenge the current titans on online and mobile payments, such as PayPal, Square and Google. Users will need to pair a credit card with their login information to make purchases on partnering e-commerce mobile apps, which is a small test involving one or two partners.
PayPal shared a similar statement of a "great relationship with Facebook" and plans to continue the same in the foreseeable future. But the payment processing service is keeping its options open in terms of new competition. "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."
While Facebook is taking robust steps to simplify the payment system for mobile app users, Sucharita Mulpuru, a retail analyst at Forrester Research, criticized Facebook's approach in the new direction.
"Nobody trusts social networks with their financial information, and they are certainly not going to trust Facebook," Mulpuru told AllThingsD. "Maybe they have a few million people that have bought something on things like FarmVille, but that does not a network make."
With the latest approach in mind, Facebook has, however, not revealed how many credit card details the California-based company has on file. But we will soon know, with the success of the current test, if Facebook is ready to make such a huge leap.
