Facebook has been wading through the shallow end of the payments pool for years, but if a test the company is readying is any indication, it could be getting ready to go head to head with the big boys (like PayPal).
All Things D says it has confirmed that Facebook is indeed testing a new payments product that would allow shoppers to make purchases on mobile apps by simply using their Facebook login info if they’ve provided Facebook with their credit card info. The test, the report says, will launch in the next month or so, with JackThreads as a pilot partner.
Facebook has been toying with payments for quite some time, and would seemingly be a natural fit in the space due to the user identity factor that is associated with one’s Facebook account, all the data it has about user habits, and of course the sheer breadth of its coverage (over a billion users).
Last year, Facebook launched an updated mobile payments flow, which would allow for carrier billing. In other words, you would buy something from an app, and it would be billed to your carrier.
This new product would take things a sizable step further.
PayPal, confident in its own legacy in the space, has said that it welcomes competition, but Facebook is playing down the notion that it is even trying to compete. The report shares a statement from the company:
We continue to have a great relationship with PayPal, and this product is simply to test how we can help our app partners provide a simpler commerce experience. This test does not involve moving the payment processing away from an app’s current provider.”
It can’t hurt users to have more options, and there is probably a significant number of people that have a Facebook account and no PayPal account.
Are you a new developer hoping to cash in on Facebook games? If so, Facebook has made some recent changes to its developer payment registration that you will need to be aware of.
As part of its weekly Operation Developer Love update, Facebook says that it has updated its policy for developer payment registration. The social network says that any developers must now present verification documents if they use a bank account outside the U.S. or Europe. The same applies to those who have Facebook pay out to a PayPal account.
The change in policy isn’t immediate as Facebook is giving developers until April 22 to gather the necessary documentation. After that date, developers will not be able to accept payments until they present verification documents. For those who don’t want to submit verification documentation or can’t, Facebook encourages them to switch to a “qualifying bank account.” Hit up Facebook’s help center for more information.
In other news, Facebook has re-opened the apps process to the Preferred Marketing Developer program. The new round of entry features two updates that developers will need to be aware of:
In order to focus on high-potential candidates who have proven success working with clients on strategies in-line with our owned, paid and earned media narrative, we are moving to a referral based system where candidates will have to be referred by either a Facebook or Ads PMD employee.
We have also announced new requirements for the PMD badge, pushing candidates and members towards deeper integrations across Pages, Ads, Apps and Insights.
March 2013 Breaking Changes also went live last night. Developers will need to make sure that their apps comply with the following changes:
No more accessing mailbox FQL tables without a user session
Removing apps from /me/accounts/ and page_admin FQL table
Removing redirect to docs when hitting graph.facebook.com
As for the weekly bug report, Facebook says that 217 bugs were reported this week, and 24 were fixed. Forty-eight bugs were accepted for further review. Check out the blog post for details on the latest bug fixes.
Back in February, Facebook and Bango announced a partnership, which would see Bango providing mobile payment services for Facebook. Today, Bango announced that its Facebook integration is now live.
This appears to be an extension of the carrier billing feature Facebook revealed in June.
Bango is providing Facebook with mobile web carrier billing in the US, the UK and Germany, with more countries to come throughout the rest of the year. The offering enables Facebook users to purchase digital content without the use of premium SMS messages or “the limitations of credit cards”.
“App stores, publishers and content providers use Bango to collect payment from mobile users for online content and services,” says Bango. “Bango’s pervasive presence across app stores, publishers and mobile operators creates a platform effect for its partners, leading to more identified mobile users and maximizing the number of single-click payments. The result is significantly higher rates of collection. This is the experience that Facebook is now using for its smartphone payments service on the mobile web.”
“Conventional operator billing is expected to achieve around a 40% conversion rate,” the company says. “Put simply, most mobile commerce customers who click ‘buy’ do not successfully buy. Billing with the Bango payment platform delivers an average conversion rate of 77%. Most users who click ‘buy’, do buy.”
Bango’s offerings are already in use by Google Play, Blackberry App World and Opera Mobile Store. Soon, it will provide payment services to Amazon as well.
These days, brick and mortar businesses displaying some kind of signage saying “Like us on Facebook,” are nearly as common as those displaying Visa and MasterCard logos. That’s worth considering, when you think about using Faceabook as a way to pay for goods and services in the physical world.
Of course, Facebook users have developed some trust issues with the site over the years. It would be quite interesting to see if a PayPal-like service from Facebook would be widely adopted. It’s one thing to trust a third party with your status updates and photos. It’s another to trust them with your money.
Last week, Facebook announced that it is getting rid of Facebook Credits, in favor of real money. Users will start paying for virtual goods using their native currencies: Dollars, Pounds, Yen, etc. This represents the beginning of users being able to treat their Facebook account like a bank account, or at least like a PayPal account. I’m not sure if Facebook is FDIC insured.
While Facebook did not say anything about using currency to pay for things in the physical world, one can simply connect the dots. For one, Facebook has over 900 million users. Many of them carry it around in their pocket all day long. Now, consider that Facebook recently acquired Tagtile, described as “your universal loyalty card,” for which you can “visit local stores, tag the Tagtile Cube with your phone, and get rewarded for being an awesome customer.”
If Facebook is going to offer a digital loyalty card to use at stores, and Facebook is going to have user account balances based on actual money, it seems only logical that users will simply be able to pay with their Facebook accounts, as long as businesses adopt the technology.
Plink co-founder Peter Vogel wrote at TechCrunch, “Last year, 15 million people bought Facebook Credits, according to their S-1 filing, so it’s assumed Facebook has close to 15 million credit cards on file. By the end of this year, once paid apps are added to Facebook’s App Center, it wouldn’t be surprising if 50 million people, or about five percent of Facebook’s users are purchasing apps and other digital good, like movies, music and TV episodes, which means Facebook would have a pool of 50 million people who have entrusted it with their credit card information.”
“At that point it’s a very short distance to a ‘Pay with Facebook’ blue box showing up every time you make an online purchase (on web sites everywhere, not just on Facebook),” he adds. “Why re-enter your credit card number when you already trust Facebook to handle the transaction and bill your card? For users this could be seen as more convenient and safer than entering their credit card number on multiple sites. Facebook is PayPal on steroids, with the strength of a billion members.”
That’s an incredibly good point. Think about how the Facebook sign-in option already works for many sites in the web (and especially from mobile devices). It is so much more convenient to simply tap the button to sign in with Facebook than having to enter a whole other account name or email address and password. Paying this way could save a lot of time and hassle.
This already exists, you know:
If Facebook can get people paying for things online regularly, people may start putting more of their money into Facebook accounts, which will make them a lot more likely to pay for things offline.
The Trust Factor
That trust factor could be a major obstacle for Facebook, however. Privacy issues have been rampant with the the social network’s dealings for years. Last year, as the result of a settlement with the Federal Trade Commission, regarding privacy, Facebook had to agree to regular third-party audits to make sure it remains in compliance. This all came after Facebook was found to have not kept its promises, by not warning users of privacy changes or getting their approval in advance. Essentially, changes were made an an opt out basis, rather than users opting in.
Just this week, the company switched default email addresses of users to Facebook email addresses without warning. This isn’t exactly a privacy issue, but it’s another change being made to users’ personal accounts for them. Things like this tend to irk users, and don’t do much to make users more comfortable with how the company is handling their accounts. A Lifehacker article even goes into all the reasons why the switch to a Facebook email address is less than beneficial.
Another big Facebook story this week is about a feature that Facebook rolled out called “Find Friends Nearby,” which was quickly pulled after the CEO of Friendthem claimed Facebook has stole their idea, and threatened to sue. If you’ve seen The Social Network or read book it was based on, you’ll know that Facebook has a long history of being accused of such things. That’s not to say whether or not these things have merit, but public perception is a valuable thing. Some people already have a hard enough time trusting banks with their money.
Side note: It’s unclear, by the way, if the Friendthem situation was directly related to Facebook pulling the feature. The company claims it was only a test, and not a formal roll-out anyway. It does appear to be based on the company’s acquisition of social discovery app Glancee.
We asked our Facebook fans about trusting Facebook with their money. Here is the overwhelmingly negative response we got in just a half hour’s time:
Another question worth considering is whether or not people want one company to have so much control over their lives. Do you want to keep so much personal information, photos, videos, and money all under one Internet-based account. There are major hacking stories in the news frequently these days, and many may be hesitant based on that very fact.
This month, another prominent social network, LinkedIn, fell victim to a password leak. LulzSec hackers managed to gain access to 10,000 Twitter accounts via a vulnerability in a third-party app. Consider how many third-party apps are connected to Facebook. According to the company, as of March, over 9 million apps and websites were integrated with Facebook. How much bigger of a target would Facebook be with more people keeping their money tied up in their accounts.
Of course, people are already keeping some amount of money tied up in Facebook, on a much smaller scale than what the future may very well hold.
“People can store their payment information on Facebook in a trusted environment and then make purchases across a range of apps – without having to re-enter their payment information in each app,” Facebook says about its current Payments offering. “Payment options include credit and debit cards, PayPal, mobile payments, gift cards and numerous local payment options around the world.”
If Facebook makes a significant transition to the offline, non-app world (like its peers are also trying to do), will you make the transition along with them? Will you use your Facebook account to buy burgers, gas or other every day items? Let us know in the comments.
As much as Facebook would love to still portray itself as a collection of care-free hackers working for its social network users, the company now has investors to answer to. Now that the company has gone public, it will have to report its quarterly earnings to shareholders, who will expect nothing but growth. Facebook is keenly aware of this, and has begun experimenting with several new ways to rake in revenue.
Some of those new revenue streams have already been implemented. Facebook’s Offers program, which allows businesses to create coupons in News Feed posts and Facebook ads, is nearly out of beta. The new Facebook App Center will give Facebook a cut of paid-for Facebook apps, much like Apple’s App Store. Also, Facebook CEO Mark Zuckerberg himself has promised that mobile will be Facebook’s new priority, meaning new and better mobile Facebook ads are on the way.
But now, according to The Wall Street Journal, Facebook is allowing users in New Zealand to purchase their way onto the top of their friends’ News Feeds. From the report:
The latest revenue spaghetti test came last week, when Facebook began charging users in New Zealand as much as two New Zealand dollars (US$1.53) a post to ensure that their own friends see what they write.
The feature is currently called “Highlights,” and is, understandably, confusing and angering some New Zealanders. Though brands on Facebook are already able to purchase a service similar to “Highlights,” users must first “like” the brand’s Facebook page before the paid-for posts will hit their News Feed. The Wall Street Journal has quoted a Facebook spokesperson as stating the feature is only a test “to guage people’s interest in this method of sharing with their friends.”
If this feature becomes more widespread, it could risk upsetting Facebook users en masse. The News Feed, for now, is very much a meritocracy, where much-“liked” posts and posts of great significance, such as marriages and new jobs, rise to the top. A pay-for-placement would upset this balance, making users suspicious of their News Feeds.
Aside from a backlash from the Facebook community, the “Highlights” revenue scheme could backfire in a different way. Users who pay to flood their friends’ News Feeds with posts could find themselves without too many Facebook friends.
