A new mobile-payments delivery system in development by Facebook would let consumers make mobile purchases through a Facebook account login. If released, the product could be viable competition to PayPal and other major mobile-payments providers.
According to AllThingsD, users would be able to store credit-card information on Facebook and then use the account to make purchases on various mobile apps and websites. With billing information saved and managed by Facebook, transactions could be completed more quickly.
Facebook would also potentially partner with existing mobile apps to increase adoption of its mobile-payments platform. Testing is expected to start soon.
The current market for mobile purchases on smartphones and tablets is saturated, with a wide range of providers. But without a clear-cut leader dominating market share, Facebook — as well as other providers — has an opportunity to leap into the front of the pack if consumers are willing to adopt its services. The industry is aware that purchases on mobile devices can be tedious, and thus an effective, secure solution could get rave reviews from customers and retailers.
Focused on the User Experience
One important distinction, though, is that Facebook doesn’t want to become a payments processor. Instead, the company aims to establish itself as a middle-man that facilitates payments through already-established processes. Unlike mobile-wallet solutions that seek to replace credit cards and other payment methods, Facebook would augment credit-card purchases to improve the customer experience.
The biggest challenge, according to some analysts, will be convincing users to hand their credit-card information over to a social network.
“Nobody trusts social networks with their financial information, and they are certainly not going to trust Facebook,” said Sucharita Mulpuru, a retail analyst at Forrester, in the AllThingsD post.
Even so, Facebook has plenty to gain from such a setup if it can collect more data about how consumers shop online. Such insight could be used to improve advertising value on the social network, allowing Facebook to potentially use gathered information to enhance the quality of consumer targeting.
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