Is Facebook Testing Its Own Mobile Payments?

Facebook (NASDAQ:FB) will begin testing a new mobile payments system within the next month or two that would let shoppers make purchases on mobile apps using Facebook login information, All Things D reported on Thursday (Aug. 15).

Some analysts immediately characterized the move as a direct competitor to PayPal (NASDAQ:EBAY). However, Facebook took pains to say it was not trying to compete with PayPal. "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. This test does not involve moving the payment processing away from an app's current provider," it told ATD.

According to unidentified sources, the new system would allow any shopper who has already given Facebook a credit or debit card number to make purchases on mobile apps using the system without filling out billing information. Flash-sale shopping site JackThreads will be the only mobile retailer testing the new payment system, at least initially.

Facebook confirmed that it is doing a test, but did not lay out exactly what it's testing. And while it's appealing to speculate that Facebook and PayPal could go head to head, a "let's you and him fight" strategy is more attractive to outside observers than to anyone actually doing payments transactions.

In this case, Facebook has good reasons not to try doing payments: Its reputation for privacy and security aren't great, and it doesn't currently have a large cache of payment-card numbers. Forrester retail analyst Sucharita Mulpuru said she would be surprised if Facebook has more than 10 million card numbers on file in the U.S., adding, "Nobody trusts social networks with their financial information, and they are certainly not going to trust Facebook."

For more:
See this All Things D story

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