Facebook Brings on PayPal to Help Manage Payments

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.

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