Facebook apparently readying PayPal competitor, aiming at mobile purchases

Facebook is apparently testing a payments product that will allow users to make purchases on online apps by using their login to the social network.

In effect, the product should make life easier for anyone who’s given their credit card information to Facebook, as it would allow them to make purchases on partnered mobile ecommerce apps without entering their billing information.

According to AllThingsD, Facebook has confirmed that testing is happening.

The pilot partner, it says, is Thrillist-owned JackThreads — a flash sales site for young men.

As well as Paypal, the product will take on similar products from Google and Amazon as well startups such as Braintree, Stripe and Klarna. Should the test go through as is though, it looks like it’ll be focused more on providing a better mobile checkouts experience than an actual payments solution.

Perhaps that’s why Paypal doesn’t seem overly concerned about the tests.

“We have a great relationship with Facebook and expect that to continue. Our customers love using PayPal on Facebook,” a PayPal spokesperson said in a statement. “We’ve been investing in mobile payments since 2006, and last year 10 percent of our total payment volume — US$14-billion — was from mobile devices. However, we always welcome competition and are looking forward to seeing what Facebook will announce.”

It’s also unclear how many credit cards Facebook actually has on file or, indeed, how many people would be willing to hand over their details to the social network.

“Nobody trusts social networks with their financial information, and they are certainly not going to trust Facebook,” Sucharita Mulpuru, a retail analyst at Forrester Research, told AllThingsD. “Maybe they have a few million people that have bought something on things like FarmVille, but that does not a network make.”

She reckons that the social network might have better luck creating a platform for Facebook-centric small businesses who are currently stuck using inefficient mediums such as email in their business dealings.

“PayPal is well-suited because they have more than 100 million accounts with real people who have trusted them with their information. To be a latecomer to the game in something as complex as payments, they would be better off buying Square,” she said.