Facebook’s New Payments System?

So we know NSA already knows what we discussed with our mom’s in midnight phone calls this week and Facebook makes it easy for any of us to stalk our high school sweethearts, even when we’re both happily married to other people (and have been for a decade) but now, Facebook is upping the ante yet again. According to rumors that began on Thursday, and which Facebook confirmed, the social media big dog is testing yet another new payments system in which consumers would use stored credit card data (that’s apparently already on Facebook) to buy things on third-party mobile apps. Now, for months, we’ve been able to buy birthday gifts right from our newsfeed, but this is looking like it’s something different.


Using the Facebook log-in credentials we know by heart, and by the way, which are similar to Amazon’s one-click purchase capability, we can basically eliminate the frustration that mobile shopping can sometimes present. In other words: keep your credit card in your wallet – Facebook already knows it (probably better than we know it ourselves). From a security feature, this could be promising, believe it or not. First, Facebook’s focused on the security aspects of living online in recent years, so that’s good. And it also has the capabilities of trusting only those e-commerce sites that are safe. If this sounds too far in left field, you should know it’s the exact same technology Amazon has used for years.

Does it have what it takes, though, to see the kind of success Amazon enjoys? Well, it is Facebook, so the short answer is yes – but with a “but”. First, Facebook’s not going to process the credit card payments. Instead, it’s being described as a “hold” until it can transmit your credit card information. That could be problematic. Would you go to dinner, hand your credit card information over to the waitress with the knowledge she’s going to hold it until the restaurant closes? Of course not. Yet Facebook wants you to do just that.

Hold On

That said, there are those who think this is a grand idea – and one that could be the start of a smooth and beautiful process. Already, the vast number of credit card users enjoy zero fraud protection from our credit card networks, but that’s really not even the biggest problem. If you buy a birthday gift at 10:30 in the morning, pay for overnight shipping and the transaction’s not even processed until 8 p.m., then there are bound to be problems. Sure, for rush orders, a company can override the system, but it sure leaves a lot of room for mistakes.


So is this a threat to PayPal? Most are taking a hold and wait position, but the fact is, it’s simply not likely. What many don’t realize is PayPal is much more than a way to pay for your purchases courtesy of the infomercial that kept you up all night.

In 2000, the Bureau of Labor Statistics reports there were approximately 41,000 freelance writers in the U.S. By 2006, that number exploded to more than 135,000 – and that’s not counting the designers, graphic artists or even copywriters. A lot of people are earning a living online and those are the folks that keep PayPal relevant. There’s not a writer out there who would say they prefer to use Facebook as a way to ensure their fees are delivered. Want proof? Remember Google Wallet? How about Google Checkout? Exactly. Even if these products were ones you were using (or maybe still do), not many (if any at all) were using them to handle their invoices. PayPal offers it all.

While there are other competitors out there much more suited to PayPal’s customer base, people just aren’t going to abandon their PayPal accounts, especially if it’s been established and certainly if they use the business debit cards that ramps up the convenience factor for PayPal. Plus – consider this fact, also from BLS: There is one new blog added every single second of every single day and 21 million websites that are brought live each year.

Most transfer the funds from their PayPal accounts to their bank accounts, including this writer, but there are always funds available in the account for those…yes, the late night infomercials for the latest in bakeware. Hey – we get insomnia, too! But there’s another reason many are hardcore loyalists to PayPal:

PayPal Loyalty

Pulling from a personal experience, one morning a series of texts came through alerting me that transactions were being processed – they were coming seconds apart. Considering I was sitting at the kitchen table drinking coffee, the anxiety ramped up and the heart started racing. I was talking to a PayPal representative in a matter of about two minutes (seriously) even after logging in and sending the message with the code that lets the representatives know they’re talking to the right person. Somehow, a hacker in Japan managed to get into my account and began spending money left and right. No exaggeration: two minutes later (yes – TWO minutes), the transactions were off my account, the representative had helped me change the password while he waited on the line and another two minutes later, I was back to the business of drinking coffee at the kitchen table. Less than 10 minutes for a complete resolve.

Facebook will never be able to compete with that. In fact, do you know of an 800 number to call Facebook?

So no, PayPal has nothing to worry about at this point.

Besides, there are a couple of “huh?” dynamics involved with this new effort, should Facebook move forward. Your credit card will already need to be in the database for Facebook. Besides, it’s going to take more than a few million of Zuckerberg’s dollars to bring it up to par with PayPal or even Google for that matter. It’s a long slow dance – and in the words of a southern Grandma I know – it’s a dance “they ain’t leadin’ “. In other words, it has a long way to go and some might big shoes to fill if it hopes to become a threat to PayPal.

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