Facebook testing a 'PayPal killer' to simplify mobile payments

Social network users could type in their login details to make on-the-go payments

(REUTERS/Valentin Flauraud)

Facebook is set to take on digital payment giant PayPal with its own payments product, according to sources familiar with the social networking site's plans.

The product would allow internet users to make purchases on mobile apps with their Facebook login information.

Any user who has previously provided the website with their credit card details would be able to make purchases on partnering e-commerce mobile apps without entering any billing information, tech news site AllThingsD reports.

Facebook confirmed it is in the process of preparing a testing phase for the product.

If successfully launched, the product would pose a direct challenge to PayPal on mobile devices and would also compete with similar products from Google, Amazon and smaller startups such as Braintree.

For now Facebook's test is only focused on making it easier for people to shop on their mobiles but if the product becomes available on enough partner shopping sites it could give the social network lucrative data about its users shopping habits.

“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 to the news site.

“We’ve been investing in mobile payments since 2006, and last year 10 percent of our total payment volume — $14 billion — was from mobile devices. However, we always welcome competition and are looking forward to seeing what Facebook will announce.”

Millions of people already spend money through the Facebook, particularly users of popular in-site games like FarmVille.

Facebook's current revenue from payments and other fees is reported to have totalled $214m, or £137.7m, in the second quarter of the year, a fraction of the company's billion dollar core advertising business.