Facebook has come a long way from status updates and farming simulators. Hardcore data analytics, dedicated business pages and targeted ads have transformed the site into a real marketing force to be reckoned with, and they’ve still got one more ace up their sleeve.
Facebook mobile payments, an “experiment” first reported by AllThingsD, is rumored to pit the world’s most popular social network against e-payment companies like PayPal. Though the project is in its infancy, its very existence should have the mobile payment heavy hitters looking over their shoulders.
Convenience is ostensibly what a Facebook mobile payments option would offer consumers. Entering payment details on a tablet or smartphone can be a chore, and doing it from a keyboard isn’t much easier. Users who trust Mark Zuckerberg with their payment info could easily streamline purchases by connecting their bank account to their pre-existing Facebook account. Then, the next time they shop, they could just tap a Pay By Facebook button.
It wouldn’t be the first time Facebook has been a middleman for online commerce. Facebook Credits, the program designed to facilitate in-game purchases for FarmVille, Candy Crush and other similar programs worked in a similar manner. By giving users a consistent way to pay for power-ups and extra lives, Facebook hoped to rake in lots of in-app purchase cash like Google and Apple.
According to TechCrunch, the company recently switched to a real-life currency model due to some conversion issues, but the program’s popularity shows consumers aren’t afraid of giving Zuckerberg and company their precious credit card digits.
Of course, user convenience isn’t Facebook’s only motivation behind the mobile payment experiment. In his recent Forbes article Tomio Geron says, “[The new mobile payment feature] moves Facebook closer to being a comprehensive portable digital identity for people wherever they go.”
Then there are the advertising and analytics benefits. According to Engadget, advertising accounts for 88% of all Facebook’s Q2 2013 revenue. A mobile payment option could give advertisers new tracking data, and that’s not even considering what Facebook could do with the data.
There’s no shortage of competition on the mobile payment front. Facebook would face off against heavyweights like PayPal and promising newcomers like Clinkle. Unfortunately for its competitors, Facebook has brand recognition and a user base that not even PayPal can match.
For users who already trust Facebook with their financial information, particularly those who bought into services like Facebook Credits, using the service would be much easier than downloading a new app and learning all its intricacies. The sheer volume of people already using Facebook every day gives the platform a huge edge.
Facebook is no stranger to the importance of privacy or security. After hackers, or “security researchers,” exploited flaws in the site by posting messages on the founding member’s wall, it’s safe to assume there may be some issues.
“Most consumers are leery of the concept of mobile wallets to begin with,” says PCWorld writer Tony Bradley. “Combine that with a general distrust of security and privacy on social networks, and you can see what a serious obstacle this could be for Facebook.”
It’s a valid point, especially given users’ disinterest in mobile wallets as a whole — the same article claims nearly 70% of adults have no interest in using one. Facebook will have to look long and hard at this before implementing any major changes.
In this early stage, it’s hard to tell what impact Facebook mobile payments will have on the industry at large. The company’s long-term plans have yet to be announced, but it’s fair to assume any final product would make it easy for users to sign up, and give marketers demographic insights only an all-in-one service could provide. It’s still difficult to say what will come of this experiment, but if it’s anything like their previous updates, users will hate it and then embrace it.