Facebook is testing a mobile payments service for its third-party apps, but don’t call it a PayPal competitor — at least not yet.
The key distinction between PayPal and Facebook’s new entry into the fast-evolving mobile payments segment is this: the social media giant is not processing the payments.
Facebook will use third parties, including PayPal and Stripe, for the payment transactions. Facebook would store credit card numbers that have been used for purchases via Facebook Gifts or through the social media site’s games.
The strategy is to make it convenient for Facebook users to make payments on mobile apps by clicking on a Facebook button or icon. This service could make Facebook advertisers much happier because it would make it easier for new customers to make purchases.
Facebook issued a statement to clarify the initial media reports: “We are working on a very small test that gives people the option to use their payment information already stored on Facebook to populate the payment form when they make a purchase in a mobile app.”
It will be a “very small test,” Facebook said.
And most significantly, for those pondering the bigger picture, Facebook said the new service “does not involve moving the payment processing away from an app’s current payments provider, such as PayPal.”