Facebook’s PayPal-Style E-Payments Could Raise Privacy Concerns

In order for such a system to work, Facebook would need millions of users’ credit-card info on file.

Facebook is reportedly testing a PayPal-style e-payments system, one that would allow the social network’s users to make purchases via mobile apps.

According to AllThingsD, which cited unnamed sources “familiar with the company’s plans,” those users could buy something by inputting their Facebook login into the app’s purchasing interface, provided Facebook has that user’s credit card information on file. Online clothing company JackThreads is an early partner in the initiative, which Facebook has already begun testing.

One obvious competitor to Facebook’s initiative, should the latter gain enough partners to make it a widespread payment option, is PayPal, which is putting up a carefully tended front of indifference to the potential threat.

“We have a great relationship with Facebook and expect that to continue. Our customers love using PayPal on Facebook,” a PayPal spokesperson wrote in a statement to AllThingsD. “We’ve been investing in mobile payments since 2006, and last year 10 percent of our total payment volume—$14 billion—was from mobile devices.”

For Facebook, the benefits of its own e-payments system are multifold: not only could it score a percentage off its partners’ sales, but it would collect additional data about its users’ shopping habits, which it could use to refine its advertising and marketing processes. The emphasis on mobile purchasing plays into Facebook’s broader push into tablets and smartphones.

In addition to e-payments, there are indications that Facebook wants to build out its voice-recognition technology: earlier this month, the social network announced that it had acquired Mobile Technologies, which builds speech recognition and machine translation software, for an undisclosed sum.

“Voice technology has become an increasingly important way for people to navigate mobile devices and the web, and this technology will help us evolve our products to match that evolution,” Tom Stocky, director of product management at Facebook, wrote in a note posted on his Facebook wall. “We believe this acquisition is an investment in our long-term product roadmap as we continue towards our company’s mission.”

In theory, Facebook could use that voice technology to develop something akin to Google Now, which allows users to ask questions, send emails, navigate between two points and much more simply by speaking to their device; voice commands also have the potential to improve Facebook Home, its app that “re-skins” Android in order to create what’s basically a Facebook phone.

But Facebook e-payment is the technology with the potential to massively disrupt some pretty big players in the space, such as PayPal. In order to build up such a platform, though, Facebook would need to convince many millions of people to hand over their credit-card info—and that might spark privacy concerns for many.


Image: Facebook