Facebook, which like any enterprise is on perpetual lookout for ways to monetize products and services, is preparing to sidestep a longtime partner, PayPal, in order to add a potentially lucrative income stream: its own mobile payment service.
Facebook is developing a payment feature that would enable members to make purchases via selected mobile apps by simply using their Facebook logins, the Wall Street Journal reported Aug. 15.
Facebook has confirmed that it is now testing the service.
Facebook members would not need to be on the social network site to buy products. Users who have previously entered their credit card details into the Facebook database would be able to make purchases using partnering e-commerce mobile apps without needing to enter billing details. The process is similar to PayPal's.
The feature is scheduled to launch in September on a trial basis, the Journal said. The payment service will start with men's clothing and accessory retailer Jack Threads.
PayPal, which has been handling product and service payments for Facebook for about five years, can't be pleased with a development that could extract millions of dollars of its revenue over time. To its advantage, PayPal has a substantial head start with brand and market credibility and visibility that may take Facebook awhile to overcome.
"We have a great relationship with Facebook and expect that to continue. Our customers love using PayPal on Facebook," PayPal said in a statement. "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.”