Facebook is trialling mobile payments for the first time, in the latest sign that the social network is increasingly focusing on virtual payments, alongside advertising, in its efforts to reach profitability.
Under the trial, which Facebook describes as a ?very small alpha test?, the social network is partnering with mobile payment specialist, Zong, to allow users to pay for Facebook Credits using their mobile phones. Users can use the system to buy credits and virtual gifts direct from the Facebook Gift Shop, as well as to pay for virtual goods or services on a small number of approved apps. Previously users could only pay for these items using Visa, MasterCard or American Express.
With the new system, users enter their mobile phone number in the online payment screen, and then enter a four-digit PIN code which is sent to them via SMS. The cost of the online transaction is then added to a user’s mobile phone bill or deducted from their pre-paid credits.
The system could prove a powerful tool for tapping into the youth market, arguably the key demographic for buying virtual gifts. Certainly the system makes most sense for under-18s who do not have access to a credit card, as Zong itself acknowledges that ?a [mobile] carrier can charge you anywhere from 25% to 50% of the sales price?, for making a purchase.
The move is the latest in a string of virtual payment developments by Facebook. Earlier this month, Facebook hired the co-founder of micropayments service TipJoy after previously walking away from a deal to buy the firm. It also recently began allowing third-party developers to sell physical items through its ?Gift Shop’. Meanwhile, Facebook Credits now supports 15 currencies, meaning people from countries including Japan, Colombia and the UK can all buy credits.
Though only eight third party apps currently support Facebook Credits, accepting the payment for services such as virtual birthday cards or food for virtual pets, rumours earlier this year said Facebook eventually aims to let users buy physical goods from third-party sites. This would allow Facebook to take a cut of sale prices and effectively position it as a rival to PayPal. Some commentators argue that in the long-run online payments could prove more lucrative to Facebook than advertising.
StrategyEye's related categories: Mobile Payment, Social Networks - Consumer
StrategyEye's related companies: American Express, MasterCard, Zong, PayPal, Visa International Service Association, Facebook
