Interesting conjecture. The issue is branding. Facebook has already been branded as a trivial social networking tool (if hammers, drills, and scribbled on pieces of notebook paper passed between friends in Math class are all equally considered tools). Paypal has never achieved currency status, but is more of a conduit for credit and debit payments. Being involved in online banking and ecommerce, and not being made sufficiently aware of Facebook's efforts, I wouldn't consider FB as a viable opponent (or round 1 contender) of Paypal. Paypal means payments. Facebook means 'friends'. It would take a branding event the magnitude of a lunar mission to break either company out of those bubbles.
Sidian Jones
· 8 months ago
Very interesting. And Facebook Connect is really shaking things up, though I wish Ning would implement it sooner than later. The whole Paypal scheme reminds me of this movie where someone hacks the banks to siphon all the fractions of a penny that get tossed during everyone's transactions, into his bank account. Now what movie was that?
Facebook User
· 8 months ago
Superman 3 :)
1234guy
· 8 months ago
the movie is "Office Space"
Blogger_4life
· 8 months ago
Very Interesting. However, there is a brand new concept coming out as we speak. I just read about it yesterday. It is a new startup business and could be compared to a facebook, monster (posting your resume), and an online magazine all in one site. It is called Centered Magazine. I emailed some of the founders and they were talking about this exact same thing. They were telling me about how in their Centered Community there would be a medium of exchange that could be compared to PayPal. I just found the website again. It is www.centeredmag.com
keith
· 8 months ago
if facebook creates their own virtual currency, are the users able to convert the currency back to cash? I thought there are heavy laws and regulations for any company to do this?
Adrian Dunevein
· 8 months ago
Absolutely outstanding article. Even if Facebook connect currency did not replace PayPal it would be a huge advance in the standardization of transactions on the internet.
The wild card is the implementation. It's the quality of the service personnel backing up the transactions that will make or break it. The technology is no problem, its the people behind it. Are they capable of handling complaints and resolving errors while at the same time preventing widespread fraud ?
Belinda Mitchell
· 8 months ago
I absolutely would not facebook with my money.
I need to see them allow a little more control over what is published where before I would trust them with something like money. I could totally see them being unclear about certain things and people inadvertently paying for things they didn't intend to pay for etc.
They need to get the website completely together first. Facebook is a great "machine", but it isn't a "well run" machine. They are no threat to Paypal as far as I'm concerned.
zohaibusman
· 8 months ago
Facebook's Own currency. If i am not wrong you are talking about the virtual currencies like in casino's?? Yes i find it very interesting and beneficiary for Facebook and Facebook got a tremendous trust of people around the globe now. and i also want to share this Why Microsoft Should Buy Facebook http://www.pcworld.com/article/162136/article.h...
Carl Parrish
· 8 months ago
Personally I think Amazon Payments has a better shot at this.
Louis Adekoya
· 8 months ago
I think you may have just revealed one of the best monetisation options for Facebook - one that they would perhaps have preferred to keep secret until it was ready. However, rather than the prepaid approach you have described, I think 'FacePal' or 'FacePay' would need to allow users (as PayPal does) to tie their debit/credit/bank accounts to their Facebook accounts such that payments can be deducted on demand.
Also, for security, only 'verified' users would be allowed to sign-up as users/merchants and users would be required to authorise all outgoing payments by inputting a pin via their mobile phones or similar. This could be huge!
Tinu
· 8 months ago
I'd love to see any true competitor to Paypal, if just in the sense of the competition making all the tools better for everyone. I used to be a die-hard PayPal fan and advocate, now if PayPal is the only purchase option there's a 50% chance I won't buy.
Rafael Montilla
· 8 months ago
Great info. about Facebook Connect,
Σχολή Χορού
· 8 months ago
It was almost inevitable that the facebook team would try something very profitable. I thing that will be the start of the end of this social giant.
Christos Winter
· 8 months ago
Great article Ben, I'm sure facebook will definitely be looking into this in the future!
Gerry Humphrey
· 8 months ago
I would rather see facebook embrace PayPal or have their currency able to be traded in and out of PayPal.
In any case, this is way to lucrative to fraud (just check out all the WoW gold scams)
The King
· 8 months ago
Christ. I.T. idiots claiming the old battered and discarded "virtual currency" idea can really, really for real work this time. PayPal is REAL money. That is why PayPal works. This is not an anti Facebook rant. The brand is very strong and reasonably trusted (whether that is warranted is certainly up for debate.) "Virtual online currency" has always been and will always be a stupid "I can trap them in my store so they can only buy stuff through MY gateway" idea. It's been done before and failed miserably as it deserves to. Real money can buy anything anywhere.
Hilary
· 8 months ago
This is a lovely friendly idea, however it does not take into account various realities that are taking place today. The USA and its protectionism stance that harks back to the bad old days of the last century.The currency control issue in all the affected countries, banks in South Africa for instance already do NOT allow transactions on facebook such as advertising! So the 750 000 South Africans who use it are already hamstrung. What about the other countries little petty nonsense?
PayPal is the way it is because of the huge load in being compliant in all the countries it operates in. Face book is looking for $100million just for hardware, how on earth will it fund this virtual economy? With another $150 million it does not currently have?
No the way Facebook will make money is using real money, money is a way of bartering for good and services we want. Not virtual buddy hugs. Which are just a pain most of the time.
Sell me something I want such as (in these economic times) discount amazon vouchers, discounted pay pal transaction fees, discounted airtime in the country I am in at the time. Virtual money can have the power to virtually bankrupt Facebook but real money and real transactions can grow the service company it will become.
Jeannie Christensen
· 8 months ago
Such good insight. I think Facebook should def work the PayPal angle. I can only speak for myself here, but since I already have so much info, etc on FB Connect, it would be a lot easier to use it to pay with a click online than it would be PayPal.... Just add the FB badge to a shopping cart moment and voila! the deed is done.
Steve
· 8 months ago
Interesting concept. It does assume that facebook remains somewhat if not totally dominant in its industry. Paypal was able to diverge from a mostly ebay related service and would survive without it. If this service does see the light of day I'll be researching it on justaskgemalto, a digital security site.
Diamonds
· 8 months ago
I'd like to see this, paypal has been monopolizing this industry, maybe facebook could give them a run for their money...
Ralph
· 8 months ago
Great article and good on you for pointing out what I think may be Facebook's best monetization strategy yet. If Paypal can do it, there is no reason why Facebook cannot do something similar if not better, and with the Facebook Connect platform it could open up a huge network of users. I'm already integrating Facebook Connect with my website and am now even more inclined to do so.
Olatunji Olayinka
· 8 months ago
i think it should be FacePAY and not facepal
anymouse
· 8 months ago
I don't get it. Virtual currency is a cool idea, right up there with teleportation. But what is there of value to buy on Facebook?
froggertv
· 8 months ago
Well its time for paypal to rethink, as facebook is going to challenge it on its own turf.
All Comments
Being involved in online banking and ecommerce, and not being made sufficiently aware of Facebook's efforts, I wouldn't consider FB as a viable opponent (or round 1 contender) of Paypal.
Paypal means payments. Facebook means 'friends'. It would take a branding event the magnitude of a lunar mission to break either company out of those bubbles.
The whole Paypal scheme reminds me of this movie where someone hacks the banks to siphon all the fractions of a penny that get tossed during everyone's transactions, into his bank account. Now what movie was that?
The wild card is the implementation. It's the quality of the service personnel backing up the transactions that will make or break it. The technology is no problem, its the people behind it. Are they capable of handling complaints and resolving errors while at the same time preventing widespread fraud ?
I need to see them allow a little more control over what is published where before I would trust them with something like money. I could totally see them being unclear about certain things and people inadvertently paying for things they didn't intend to pay for etc.
They need to get the website completely together first. Facebook is a great "machine", but it isn't a "well run" machine. They are no threat to Paypal as far as I'm concerned.
Yes i find it very interesting and beneficiary for Facebook and Facebook got a tremendous trust of people around the globe now. and i also want to share this
Why Microsoft Should Buy Facebook
http://www.pcworld.com/article/162136/article.h...
Also, for security, only 'verified' users would be allowed to sign-up as users/merchants and users would be required to authorise all outgoing payments by inputting a pin via their mobile phones or similar. This could be huge!
I'm sure facebook will definitely be looking into this in the future!
In any case, this is way to lucrative to fraud (just check out all the WoW gold scams)
I.T. idiots claiming the old battered and discarded "virtual currency" idea can really, really for real work this time.
PayPal is REAL money. That is why PayPal works.
This is not an anti Facebook rant. The brand is very strong and reasonably trusted (whether that is warranted is certainly up for debate.)
"Virtual online currency" has always been and will always be a stupid "I can trap them in my store so they can only buy stuff through MY gateway" idea.
It's been done before and failed miserably as it deserves to.
Real money can buy anything anywhere.
PayPal is the way it is because of the huge load in being compliant in all the countries it operates in. Face book is looking for $100million just for hardware, how on earth will it fund this virtual economy? With another $150 million it does not currently have?
No the way Facebook will make money is using real money, money is a way of bartering for good and services we want. Not virtual buddy hugs. Which are just a pain most of the time.
Sell me something I want such as (in these economic times) discount amazon vouchers, discounted pay pal transaction fees, discounted airtime in the country I am in at the time. Virtual money can have the power to virtually bankrupt Facebook but real money and real transactions can grow the service company it will become.
Just add the FB badge to a shopping cart moment and voila! the deed is done.