Facebook to test mobile payments service

Facebook is testing a Paypal competitor for mobile payments

Facebook is coming with new feature for Paypal payment. Now users can make purchases through mobile application by payment information they add to their account on the social network.. Facebook plans to test a mobile payments service .They describe it  on a “very small test”. And the company says there is set schedule for making the service available to users. The service would use payment information that shoppers store on Facebook to automatically complete checkout forms of certain mobile apps. Then, the app would process the purchase. Under the service, a user would register their credit card with Facebook in advance (many people already do this because they play games or on Facebook for things that require transactions) and when they want to make a payment, they would just log in with their Facebook credentials, rather than digging out their credit card number.

 Spokeswoman Tera Randall said in an e-mailed statement that Facebook has a “great relationship with PayPal, and this product is simply to test how we can help our app partners provide a more simple commerce experience.”

 “Consumers want safe, seamless and convenient mobile payments and there are a growing number of competitors that consumers trust more — such as PayPal, Visa (V.me) and others,” Carrington said in an e-mailed statement.

 There has been speculation that Facebook is looking to take on Paypal and other providers of those services that allow their services for billing. Paypal has already put out a statement that they welcome the competition, to which Facebook said it has a “great relationship with PayPal” PayPal and the two companies are partners. PayPal spokesperson said in a statement, “We have a great relationship with Facebook and expect that to continue. Our customers love using Paypal on Facebook.”

Paypal continued, “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 look forward to seeing what Facebook will announce.”

To use Facebook’s upcoming online payments service shoppers will have to hand over their credit card details to Facebook. Given the recent PRISM revelations however, it’s possible that users will be reluctant to hand over their personal details to the social network.

The user benefits from ease of use and the merchant benefits because it means more sales are completed. Facebook, of course, benefits in a number of ways including data acquisition and whatever kind of transaction fee they get. Forrester Research retail analyst Sucharita Mulpuru seemed to agree, and told Allthingsd that the lack of trust users have for Facebook could ultimately hinder the firm’s mobile payments plans.

He said, “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.”

However, if it is a success a mobile payments system could give Facebook a much needed insight into shoppers’ mobile shopping habits, which could see the social network boosting its mobile experience further with better targeted advertising.