Facebook wants to be the new PayPal, but it’ll need to earn its users’ trust

Are you ready to trust Facebook with your credit card info?
Are you ready to trust Facebook with your credit card info?
Image: Reuters/Dado Ruvic
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Soon, your favorite shopping website might ask you if you’d like to pay through Facebook. In a move that pits the social media site against the online payment giant PayPal, AllThingsD reports that Facebook is rolling out out a pilot for a new payment system of its own.

But it may not last very long. The system, which Facebook reps say is intended to make mobile payments faster and easier, requires users to have a credit card on file, attached to their Facebook account. Not uncommon, given how many users pay for in-app purchases in games like Farmville—but Facebook doesn’t have the same kind of reputation that PayPal has, and many users may not feel comfortable giving it their credit card info.

“PayPal is well-suited because they have more than 100 million accounts with real people who have trusted them with their information,” Sucharita Mulpuru, a retail analyst at Forrester Research, told AllThingsD. “To be a latecomer to the game in something as complex as payments, [Facebook] would be better off buying Square.”

She has a point: There isn’t really room for an easier-to-use version of Paypal. It’s already pretty darn easy. Facebook claims its system will be more mobile-friendly; we’ll find out just what that means when it debuts via JackThreads, a flash-sale site for trendy menswear. But 10% of PayPal’s payment volume already comes from mobile payments, so ease-of-use may not be enough to set Facebook’s system apart.

And there’s the trust problem, too. AllThingsD points out that a wider launch of the system would give Facebook massive insights into its users’ shopping habits and lives. With all the offline data Facebook has already gotten hold of, you might wonder just how involved you want the site to be in your personal and financial life. Ultimately, not many of Facebook’s 1.15 billion users need to buy in for the venture to succeed, but it’s far from clear that it will give PayPal a serious run for its money.