Facebook tests mobile commerce system

Facebook plans to test a new payments product that allow online shoppers to make purchases on mobile apps using their Facebook login information, according to sources familiar with the company’s plans. The product, sources said, would allow any shopper who has previosly provided facebook with their credit card details to make purchases on partnering e-commerce mobile apps without entering billing information.

Facebook confirmed the test, which is expected to launch in the next month or so, according to AllThingsD.

The new product, if launched widely beyound its current small testing phase would undoubtedly pit facebook against digital payments giant payPal on mobile devices. It would also compete with offerings from Google, Amazon and a host of startups such as Braintree, Stripe and Klarna, all up-and-coming outfits that are working, in one way or another, to make it easier to make purchases on mobile phones. All of these companies, including Facebook, recognize that it can be challenging to easily entre your payments details on small devices.

If eventually expanded to more partners, the product would also potentially give Facebook keen insight into the shopping habits and preferences of the company’s users, a lucrative set of data for the world’s largest social network to gather.

At the same time, Facebook’s test is, for now, focused solely on creating a better mobile checkout experience, rather than getting involved in payment processing. That setup allows partnering commerce companies to still work with payment processors of their choise. Yet, part of the pitch to merchants from companies like PayPal is the simplification of the checkout experience, which Facebook is now going after.

„It sounds like a dead-on competitor of PayPal,” said a retail analyst at Forrester research, after AllThingsD apprised her of facebook’s plans.

„We have a great relationship with Facebook and expect that to continue. Our customers love using PayPal on facebook,” a PayPal spokesperson said in a statement. „We’ve been investing in mobile payments since 2006, and last year 10% of our total payment volume – $14 billion – was from mobile devices. However, we always welcome competition and are loking forward to seeing what Facebook will announce.”

To make things clear, Facebook sent the following statement to AllThingsD: „We continue to have a great relationship with Paypal, and this product is simply to test how we can help our app partners provide a simpler commerce experience. This test does not involve moving the payment processing away from an app’s current provider.”

The checkout product also potentially provide facebook and its advertisers with valuable insight into what type of products its users are buying off of Facebook. What is unclear, however, is just how many credit cards Facebook actually has on file.

The social giant has also used its Gifts product to bolster the company’s cache of credit card numbers. Launched nearly a year ago, Facebook Gifts allows users to send one another real physical goods via the Facebook platform. In order to purchase items, users need to enter their credit card or PayPal info, which Facebook then stores perpetuity.