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For more than ten years, eBay's (EBAY) PayPal has made a fortune by having a singular focus on making it easier for people to send and receive money online. In fact, it is now grown into a global platform, which can transact in 24 currencies across 190 markets across the world.
But the payments market is undergoing another trend; that is, becoming an integral part of social networks. So this week, PayPal announced a deal to provide payment services to Facebook's massive user base, which now stands at 400 million.
With PayPal, users will be able to purchase Facebook ads as well as credits. Actually, a key will be to allow for foreign transactions. Keep in mind that roughly 70% of Facebook's users are not from the U.S.
And there should be lots of traction with Facebook Credits, which is essentially a currency. In other words, it allows users to easily buy and sell virtual goods, such as cool graphics, games, applications and so on. This market is expected to explode in the coming years.
In light of the opportunity, wouldn't it make sense for Facebook to have its own payments? Perhaps so. But the company realizes it needs to stay ahead of the curve and this often means linking up with strong partners. And given Facebook's huge scale, the monetization opportunities are enormous.
Tom Taulli advises on business tax preparation and is also the author of a variety of books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
2-21-2010 @ 2:30PM
drivingonlinesales said...
That's great news. There are more and more platforms that are using paypal as a processor. As a marketer who doesn't live in the United States, I find paying for advertising costs cumbersome with international bank accounts.
I wish Microsoft and Google would do the same, but I can't see them changing stance on this anytime soon.
2-21-2010 @ 2:35PM
drivingonlinesales said...
This is a good post concerning payment for advertising. We truly live in a global environment, and borderless payement systems like paypal will have to become the 'standard' rather than the exception. So the more that companies like Facebook play 'ball' and let people pay using currency that is easy, the more this whole online advertising game will open up.
I've written a short post in response to this one on my blog and linked to you - paying for facebook ads.