Despite appearances Facebook is not trying to compete with PayPal as a transaction processing platform. While one may have inferred that Facebook was looking to compete with the online transaction giant with their test of checking out by logging in with Facebook, it is not the case according to Facebook official release.
What Facebook is actually testing is a layer between the advertisement and the actual purchase to make online purchases easier for the consumer. Much of this is aimed at the mobile market place in order to collect better data on advertisements on Facebook.
At this point payments online or through a mobile app can be a little cumbersome. The whim to purchase something may die as we struggle to get out all the information needed to actually make a purchase. This, in turn, prevents the advertisement to succeed in securing a purchase.
Facebook is wanting to store more of your information in their data base in order for you to more quickly access the information you want. In this particular way Facebook will be able to track the actual advertisement directly to the sale, allowing Facebook to prove that advertising on their site, both online and mobile, works.
As a middleman in the transaction, Facebook is only providing billing and account information once you have entered it in, while the actual transaction processing is being completed through whichever company is being used for it. That means that Facebook is not in competition with PayPal or any other payment processing company.
In fact, it may lead many to have better relations with the social media site as they are bridging some of the intervening steps between advertisement and actual purchase.
As mentioned, Facebook being the middleman in this process will be able to track how successful it actual is for advertisers. With this information it could prove how good of an investment it is for companies to use, both locally and broadly. It may also provide the leverage for Facebook to restructure its advertising scheme, allowing them to charge more for add space.
At this point in their company plan, advertisements are their main source of revenue. It would not be in their best interest to try and compete with PayPal, Google, Amazon, or any of the many other startups for payment processing at this point in time. It would be a very long and time consuming process, not to mention it would become obvious what they were doing before they launched or tested anything.
While this may help Facebook and its business plan, the added layer may not appeal to the consumer and user of Facebook.
Facebook and privacy are both issues that have come up a lot in the past few years. Facebook’s last test was adding a layer that allowed them to automatically put in your address for shipping and payment information, which was met with a lot of skepticism and pushback from their users, prompting Facebook to drop it.
Who knows what the social media giant will do in the future, but as it stands right now not only is Facebook not in competition with PayPal, its not even close to being in a position to try.
By Iam Bloom