6 Comments

Summary:

Facebook users and Facebook advertisers will soon be able to pay for virtual goods and ads using PayPal. The two companies’ strategic relationship is not exclusive, but it is significant. Online payments are a strategic battleground, and the deal is a good get for PayPal.

Facebook users along with the social networking site’s advertisers will soon be able to pay for virtual goods and ads, respectively, using PayPal. The two companies’ strategic relationship is not exclusive, but it is significant, given the competitive space. Facebook could have kept its payments independent and tried to register all its users’ bank accounts and credit cards on its own — which would be an incredibly valuable resource. But then again the company has been talking about a payments platform for years and now is only testing credits within a few applications. (Though it also opened up mobile payments to outside provider Zong last year.)

Facebook said the move was in part because 70 percent of its 400 million users live outside the United States, so it can be hard for them to transfer money to the company online. PayPal has more than 81 million active accounts.

Online payments are a strategic battleground, and the deal is a good get for PayPal. Earlier this week Google hired a former PayPal executive to be VP of commerce and run Google Checkout. Other companies with massive online account bases tied to users’ money include Amazon and Apple.

Please see the disclosure in my bio about Facebook.

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  1. spannerinthespokes Thursday, February 18, 2010

    Sounds familiar! Bring on one of the main players, learn the tricks of the trade and then float your own platform.. Google, Microsoft learnt it the hard way with Facebook.. One more down the road..

  2. PayPal Wants to Hitch its Wagon to The Social Train – GigaOM Thursday, February 25, 2010

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    [...] already has the beginnings of an alliance with PayPal to allow international advertisers to pay without credit cards (PayPal says it has more than 81 [...]

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    [...] sub-graphs, with the possible exception of the “financial trust” graph — and with Facebook Credits rolling out, it’s likely the giant social network will get its hooks into that one soon as well. [...]

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