Facebook will reportedly begin testing a payments system in the coming weeks. This will start with a few developers, exploring ways for users to use Facebook credits with third-party apps on Facebook.
The potential for such a system is huge. If Facebook has its way, this thing could eventually be used around the web and compete with things like PayPal and Google Checkout. Nicholas Carlson with Business Insider reports:
A source familiar with the company’s long-term strategy tells us a payments system is part of a dream scenario in which Facebook not only begins making money off applications within Facebook.com, but also becomes the preferred, trusted way for its users to pay for things across the Internet. In the short term, Facebook executives believe a robust platform full of apps that either use Facebook’s payments system, its upcoming ad network, or both could provide rapid revenue growth. Facebook investors hope for an IPO in the next 24 months.
Clearly, there is also a lot of potential for Facebook to make some major revenue from a payments system. Facebook has often been criticized for not being monetized like it could be. This could be a big game-changer in that respect.
“Such a system could be a powerful revenue driver for the company, which to date has largely abstained from directly monetizing the sea of applications running on the Facebook Platform,” says Justin Smith at Inside Facebook. “Estimates from executives at top Facebook application and monetization companies we’ve spoken with estimate that between $300 – $500 million in transactions will happen inside applications on the Facebook Platform in 2009, numbers corroborated by other reports.”
Obstacles that have prevented Facebook’s payment systems testing from happening sooner may have included security issues, a lack of resources, and questions about how to treat other systems using Facebook. It will likely be a while before we see any real progress on this system, because it is only beginning alpha testing. It’s definitely going to be something to keep an eye on though.
