Would you trust Facebook with your CREDIT CARD? Social network plans to roll out a pilot payment system to rival PayPal
Facebook is working on a pilot system which could rival PayPal by allowing users to make mobile purchases using their log-in details.
The world's largest social networking company confirmed plans to test the new service which would reportedly enable shoppers to buy online without entering their credit card details each time.
The system would work by automatically filling in forms with the payment details added by users to their Facebook account whenever they make purchases on mobile applications.
It is said to have partnered with a men's shopping site, Jackthreads, for the pilot. Facebook could find itself pitted against PayPal if the testing phase proves successful.
According to tech website All Things D, the payment service would still allow companies partnering with Facebook to work with their chosen payment processors.
'If eventually expanded to more partners, the product would also potentially give Facebook keen insight into the shopping habits and preferences of the company's users, a lucrative set of data for the world's largest social network to gather,' All Things D said.
An average of 699 million people used Facebook every day in June, an increase of 27 per cent on the same time last year.
If the site does roll out the payment feature, it will have valuable data about how many of its users purchased items from partner applications and better target advertisement.
The social networking group has already promised a shift away from its 'Credits' system to introduce local currency payments - expected by September 12.
This aims to simplify the purchase experience for users and make it easier for developers to price virtual goods for a global audience.
'Since we introduced Credits in 2009, most games on Facebook have implemented their own virtual currencies, reducing the need for a platform-wide virtual currency,' the site said when it introduced that system.
Whether or not users would trust a social networking site with their financial information remains to be seen. As well as concerns over Facebook privacy, Jean-Noel Georges, a Frost & Sullivan ICT director, said that more needs to be done to secure mobile devices if payments are to be made.
'As a result, we are updating Facebook Payments to support pricing in local currency instead of Credits.'
The group has recently come under fire for a Graph Search feature which it has rolled out to its US English-speaking users, enabling them to find out specific details about their friends.
Some people believe the feature is an invasion of privacy as it unearths old photos and details that would otherwise have been hard to find.
Facebook could find itself pitted against PayPal if the testing phase proves successful. The site would not expand on its plans but it is said to be focused on improving the mobile checkout experience.
'Although a personal identification number can do the job, in 2011 more than 60 per cent of smartphone users were not using a PIN to protect their mobile access,' he said.
Overall, the social network's stock has returned a mediocre performance since the company went public in May 2012.
However, last month Facebook recorded second quarter profit 1.813 billion dollars - a 53 per cent increase on 1.184 billion dollars in the same period last year.
The number of monthly users accessing the site on mobile devices - including smartphones and tablets - rose by 51 per cent year on year to 819 million in June.
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