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Facebook’s online payment ambitions
December 19, 2007
Facebook appears to be readying the next phase of its application platform - a payments system that would allow application developers to conduct transactions through the Facebook site, according to a announcement unearthed on Tuesday by Valleywag.
When he launched the Facebook platform strategy in May, Mark Zuckerberg, Facebook’s founder, hinted that some kind of payment system could be in the works. Such a system would expand the revenue streams available to application writers by allowing them to charge users for premium services, or even sell items through Facebook outright, rather than relying on advertising to make money. Facebook could also benefit if it worked out a way to pocket a piece of each transaction run over its payments system.
Facebook faces an interesting choice in deciding how to proceed. It can go it alone, partner with a company with more experience in online payments (Ebay’s PayPal springs to mind), or offer a mix of payment options. Working with an experienced partner could soothe the nerves of users concerned about privacy in the wake of Facebook’s poor handling of its new Beacon advertising service.
Still, Mr Zuckerberg is nothing if not ambitious. If he sees an opportunity to create and dominate a huge new online marketplace on his own, he may well take it. Facebook itself is not completely lacking in payments experience: It already features a "gift shop" where users can pay to send each other $1 electronic knick-knacks. This service could easily form the basis of a broader payments push.
Partner or not, if done well, a Facebook payments service could open up a world of new possiblities as established online vendors begin to conduct business not just through their own web sites, but through proxy sites on Facebook.
Perhaps Facebook should buy the bombed out gambling payment processor Neteller - for about £15m (stripping out cash in the business) they would buy a plethora of peer to peer transaction experience, a FSA licensed ebank & a great management team. Not going to cost them much given the $15billion valuation.
Posted by: Ian Gardener | December 19th, 2007 at 9:48 pm | Report this commentI don’t think Facebook will buy another company to provide this service. From what I have gathered, the company seems to follow a “roll-your-own” policy with regard to any major application developments. I see a good opportunity for Facebook to integrate with the Google Cash payment system. Whilst Ebay’s PayPal is used by many, I find it to be quite pricey.
Adding such functionality to Facebook would bring a tremendous boost to what people and developers can do with it. I don’t claim to be a Facebook expert, but I believe the potential is huge. If Facebook integrates a payment system into its API, it will be possible for developers to exploit the technology. Imagine if Facebook manages to take a small percentage of each transaction?
So when can I buy some shares?
Posted by: George Tyrakis | December 20th, 2007 at 9:36 am | Report this commentOnline payment will make Facebook even more of an interesting platform for users.
So far, the applications have managed to capture users’ interest. With such an interesting commercial addition, users will benefit from translating some of the time spent online in making money.
Useful not only for application devlopers but business users in general - certainly for a fashion designer like myself who would be keen to set up some form of shop online.
Will look out for the tool.
Roubi
Posted by: roubi l' roubi | December 25th, 2007 at 10:00 pm | Report this commentThere is a new payment systems directory - http://www.onlinepaysystems.info. Looks like it’s still under construction but going to be pretty good service.
Posted by: Mr_pod | June 2nd, 2008 at 12:38 pm | Report this commentIt seems Mark Zuckerberg hasn’t bought in to the idea completely according to AlleyInsider. Still no sign of launch 10 months since it was announced!
Posted by: G. Gallagher | October 2nd, 2008 at 6:04 pm | Report this comment