Facebook tests mobile payments service - and a whole new data opportunity

Facebook tests mobile payments service – and a whole new data opportunity

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Facebook reportedly plans to test a new mobile payment service that would allow shoppers to make purchases on mobile apps using their Facebook log-in details. The service will clearly be seen as a competitor for PayPal, but for Facebook it could be more than that – providing them with a new set of data about their users.

The process would be relatively simple – if you have already stored your credit card details with your Facebook profile, you could make purchases by using your Facebook authentication details. You wouldn’t have to reenter your credit card details on any mobile app or site you are using. If the test proves to be successful, and this process is released more widely, then this mechanism could become a serious payments player.

For consumers, this would be (another) way to make payments that at least feel more secure than entering your credit card details on any app or site that you use.

For Facebook and even for brands there are other benefits. Adding payments in this way creates a new set of data for Facebook to understand about a user – added to what they say they Like, what they talk about and how they interact with advertising, we can now know what they actually buy. This will help to build their understanding of individual users, but also how groups of users interact with products online and even with Facebook’s own advertising.

It could, if launched, allow Facebook to offer different models of advertising – charging per completed transaction for example, rather than per impression or per click. For brands it could allow them to understand a lot more about people  who purchase from them by accessing the data they share on Facebook.

Payments could add the link that would open up more data opportunities for Facebook and for brands. Allowing advertising to be purchased and optimised in different ways, and providing retailers with much more data than they could get through other payment channels. For Facebook, making payments work seems like a sensible business move.