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I think this could be huge for Facebook - they're already a well known brand which people trust and are familiar with. I reckon this will lead to people being able to purchase functionality from the Facebook site - as soon as they have your card details, the offers will come flooding in.
7 commentsThursday, May 14, 2009
Facebook Begins Testing Payments System
Could This Eventually Take On PayPal and Google Checkout?
By Chris Crum
Facebook will reportedly begin testing a payments system in the coming weeks. This will start with a few developers, exploring ways for users to use Facebook credits with third-party apps on Facebook.
The potential for such a system is huge. If Facebook has its way, this thing could eventually be used around the web and compete with things like PayPal and Google Checkout. Nicholas Carlson with Business Insider reports:
A source familiar with the company's long-term strategy tells us a payments system is part of a dream scenario in which Facebook not only begins making money off applications within Facebook.com, but also becomes the preferred, trusted way for its users to pay for things across the Internet. In the short term, Facebook executives believe a robust platform full of apps that either use Facebook's payments system, its upcoming ad network, or both could provide rapid revenue growth. Facebook investors hope for an IPO in the next 24 months.
Clearly, there is also a lot of potential for Facebook to make some major revenue from a payments system. Facebook has often been criticized for not being monetized like it could be. This could be a big game-changer in that respect.
"Such a system could be a powerful revenue driver for the company, which to date has largely abstained from directly monetizing the sea of applications running on the Facebook Platform," says Justin Smith at Inside Facebook. "Estimates from executives at top Facebook application and monetization companies we’ve spoken with estimate that between $300 - $500 million in transactions will happen inside applications on the Facebook Platform in 2009, numbers corroborated by other reports."
Obstacles that have prevented Facebook's payment systems testing from happening sooner may have included security issues, a lack of resources, and questions about how to treat other systems using Facebook. It will likely be a while before we see any real progress on this system, because it is only beginning alpha testing. It's definitely going to be something to keep an eye on though.
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V Good
The rewards for healthy competition go far beyond monetary.
Safety and convenience in payment methods is important and has been hard fought in this country for 200 years. Established methods that are comfortable for many people including checks, money orders and bank transfers are used for a variety of reasons and there will always be a need for them. The spouse that is attempting tore-establish a trusted history and record of transactions, the temporary internet visitor, the occasional user who may only wish to use one account. There will be room for many such online improvements, just don't make the Paypal mistake of alienating your members withan over restrictive policy. We were born trusting the words on our printed money:
THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE.