Facebook has just hit upon yet another money making scheme, with a report in AllThingsD claiming that the social media network is set to take on payment processing giant PayPal in the ecommerce industry. According to the report, Facebook is planning to offer mobile web shoppers the ability to buy goods online simply by entering their login details, just as they do with PayPal now. The scheme, which AllThingsD says is set to launch next month on a trial only basis, will initially begin with the men’s clothing and accessory retailer Jack Threads.
Some Facebook users have already given the social media network their credit card details by purchasing Facebook Gifts and credits for the site. When the payments processor launches, they’ll be able to use exactly the same payment method to buy goods and services from other mobile web stores, without needing to re-enter their credit card information each time. Essentially, Facebook is attempting to become a mobile-centred rival to PayPal, which currently dominates the web payments industry.
As always, Facebook plans to roll out the new feature slowly, testing the waters with a limited number of users so it can see what the reaction is, before offering the service to its wider user base. Facebook has good reason to be cautious with this effort too. As Sucharita Mulpuru of Forrester Research told AllThingsD, it has many obstacles to overcome – for one thing, hardly any Facebook users actually have their credit details on file with the social media network, and of course there’s the issue of trust, with many netizens being wary of giving their financial details to social networks, given the amount of scammers prevalent on them.
However the advantage for Facebook if it can pull this off would be huge. Not only would it be able to claim a small fee from each transaction, it’ll reap even bigger rewards in the data it accrues, gathering greater insights into its user’s spending habits, something that’ll only benefit its main money line – it’s targeted advertising business.
Stripe Enters Beta in the UK
It’s not only Facebook that’s hoping to make inroads into PayPal’s territory though, as various dedicated payments processors are also hoping to grab a slice of the ecommerce action. One of the more serious pretenders looks to be Stripe, a US-based startup that’s just opened its doors for business in the UK, the first time the service has been made available to non-US customers.
Stripe will now support the euro and British pound currencies for the first time, and is hoping its model will appeal to website owners and internet marketers through its ease of integration – the payment service can be integrated into any website with just a few lines of code, which is far easier than setting up PayPal buttons.
However, Stripe faces a lot of competition in Europe, and not just from PayPal and Facebook. A Stripe clone known as Paymill raised $13 million in funding back in January of this year, followed by an additional $5.3 million in February, and has a headstart of several months in a number of European countries. Even so, Stripe does have some advanatges in the form of high-profile clients like Grooveshark and Foursquare, plus it can offer support for ecommerce platforms like Wave, Bigcommerce and Shopify.
Of course, it’s doubtful that either Strip or Paymill were reckoning on Facebook’s own plans to muscle in on the ecommerce business, and if the social media network succeeds in its endeavors, it’s tough to see either company making much inroads in the long term.