Seriously? Ads?

&#62;<i>Fraud. Paypal and others use complex algorithms, special teams and God knows what. But Facebook has an unique and unparalleled data base of a user’s history, friends, activities and what not.</i><p>The author seems to confuse credit risk and fraud risk. Credit risk pertains to the probability of you being unable or unwilling to honour your commitments. Fraud, within this context, pertains to the unauthorised use of funds. Facebook's data may be a uniquely valuable to evaluating the former, but to fighting the latter it is less important than existing transaction history databases.<p>Financial fraud is an <i>immensely</i> complicated problem. An estimate quoted in <i>The Economist</i> recently put the fraud loss rate at approximately 0.35% of transactions and up to 1.8% for online payments [1]. Cross-border payments are a niche unto themselves - even with margins as high as 10%, the fraud risk still poses a high enough barrier to entry that even the banks handle just 5-10% of remittances [2].<p>It's 11AM and so far Visa and American Express already have 1-3 data points of swipe activity on me. Over the day they'll get 5-10 swipes apiece (+1 NYC). Facebook has a tremendous amount of value in its dataset, but think for a moment about how much Visa, Mastercard, American Express, <i>or</i> your primary bank know about where you live, what you spend on (and by virtue when and where you spend it), and, by aggregating that data, who you tend to spend with. That is what's valuable for anti-fraud and by proxy payments processing.<p>[1] <a href="http://www.economist.com/node/21554743" rel="nofollow">http://www.economist.com/node/21554743</a><p>[2] <a href="http://www.economist.com/node/21554740" rel="nofollow">http://www.economist.com/node/21554740</a>

I've been on FB since the beginning. And I've never clicked on an ad. What makes you think I will to actually buy something?<p>I barely trust Paypal, you think I'm gonna trust FB with my CC details. You gotta be kidding.<p>There are a few steps FB must do before I'll trust them with anything other than bs about what games I'm playing now:<p>1. Convince me they take my security and privacy seriously. 2. Convince me they aren't selling my personal data (statistical or not) without my permission. 3. Allow me to export (backup) ALL my data to my drive easily. 4. All me to cancel my account (not that I would). And by cancel I mean remove all my data. No questions, no sales pitches to stay - just delete everything in my profile (and off their, FB, drives). FB says they do this, But there are plenty dead folk with active profiles. Despite families begging FB to delete them.<p>Until all this happens, FB gets nothing from me except an occasional post about my Skyrim adventures. Oh and commenting on the latest high school gossip (the latter being funny. I mean, there's a reason I left town 25 years ago and hardly kept in touch. But here we all are, FB friends.)

Why not, it worked out so well for Google with their deep search history, world-beating teams of big data specialists, deep pockets and massive Gmail/Gapps userbase... <a href="http://www.bloomberg.com/news/2012-03-21/google-said-to-rethink-wallet-strategy-amid-slow-adoption.html" rel="nofollow">http://www.bloomberg.com/news/2012-03-21/google-said-to-reth...</a>

Are online payments such a big unsolved problem? It takes me all of 10 seconds to type my CC number and associated security codes. Sites that I use a lot tend to allow subsequent purchases without re-entering them anyway.<p>If everyone's facebook account has CC details attached and a 1 click "pay now" button you are only 1 XSS vulnerability from fraud on an unprecedented scale.

This thread is interesting in that some people are arguing they wouldn't trust Facebook with their cc. To me this makes no sense as the likelihood of fb doing anything funky with your cc details once obtained seems highly unlikely.<p>If something does go wrong cc have very good insurance on them. The problem does seem to be a general resentment and paranoia of large companies. I dont think fb are going to cook up a half baked solution for anything like this, there's every likelihood they will do it as securely as the next especially with the strict laws and regulations around implementing such systems.<p>Everyone with a cc has probably used it in far less secure environments than fb could ever be, for example pubs, bars, resteraunts, independent shops etc.<p>If fb did a payment system it would annoy me briefly as another payment system I'd inevitably have to register with at some point but that's realistically as far as the problems would go.

Just plain silly. People who see a big user base and jump to the conclusion of "payments!" as a future business don't have the slightest clue what they're talking about. Facebook isn't competent at tackling that problem, they don't have the expertise, experience, or relationships.<p>It makes about as much sense as looking at facebook with their billion users and saying "You know what all these people have in common? They eat food!" And concluding that facebook should become a grocery store.<p>Payments is a non-trivial business to enter. Paypal has a nearly 15 year headstart, 100 million active accounts and does a tremendous amount of business in a great many countries, yet it is still only a $4 billion a year company.

It's a possible but hardly compelling:<p>Facebook: ~ 1 billion customers<p>Visa: ~2 billion cards out there.<p>Facebook: ? merchants.<p>Visa: &#62; 10 million merchants.<p>Facebook: potentially disruptive to the existing market<p>Visa: 50+ years experience with electronics payments processing, fraud detection, government relations and consumer credit marketing<p>Facebooks main competitive advantage is(was?) relatively cheap capital.<p><a href="http://corporate.visa.com/_media/visa-fact-sheet.pdf" rel="nofollow">http://corporate.visa.com/_media/visa-fact-sheet.pdf</a><p>Edit: Corrected years, added reference

It would be very convenient for someone, somewhere, to establish a widely accepted micropayment system for the Internet.<p>I sure can just whip out the CC, type in the 16 things, the special code, the expiration date, maybe a second screen the CC vendor presents to get my address or phone number for additional verification...<p>But I would never bother for a 3 or 5 cent article. And I firmly believe that's why there is no way to pay 3 or 5 cents for a view of something.<p>But there is a lot of cool stuff we could make or do with this. It should just be easy. Why doesn't it exist? There might be a big business answer that my fellows and myself don't get as we rant over coffee.

I really don't want that to happen. Sure, it may be a good idea for them, but I'm already tired of services that won't let me register without a Facebook account. When it comes to payment, they better have a good alternative available.<p>With credit cards we have a number of "hidden alternatives". We've got multiple processors, multiple card companies, etc. It's a number of layers there. With Facebook and Paypal... you're not able to pay when they say you're not able to pay (or be paid). They're not even controlled banks, so there's little you can do about some issues.<p>Think about all the problems when Google cut someone off and didn't provide any way of contacting them. Do you have a good way to contact Paypal, or Facebook now? (besides forms that result in canned responses) What are the incentives for changing it?

Right, because the main obstacle to international online payments is having a strong brand.

I'm surprised this got so many upvotes. Does the author really believe that Facebook hasn't thought about this? Or that the ways they make money now are the the only ways they ever will?

100% spot on, Facebook could see massive profits if it pulls off any or all of the following:<p>- Upon logging in Facebook lets me know my favourite band is playing in a few weeks, tickets are $25 and I can purchase with one click.<p>- A new episode of Dexter comes out, Facebook knows I love dexter and thus notifies me and allows me to watch instantly in my browser for just $1.<p>- A games company (steam, humblebundle, blizzard, whoever) is running a sale on games similar to ones I've already liked on Facebook, I can view and purchase the bundle through Facebook.<p>All of this is taken care of in one click by my credit card being linked up to Facebook, just like iTunes. They can basically combine the best bits of iTunes + Amazon + All the data they have on everyone on Facebook and build the ultimate relevant shopping directory completely personalized to me.<p>Sure there are sites that already cater for this but it's about the convenience and instant gratification. 50% of their users log into Facebook daily and won't even bother checking out other sites for these things if they're already right there in front of them available with one click.<p>They don't even have to do it themselves initially, just hook into Amazon / Ticketmaster / iTunes data and this shouldn't take too long to develop.<p>This is where the future is and if Facebook does this there's no reason they can't be the most profitable web company in the world.

I think that "be a payment provider" is a much easier thing to think than it is to do.<p>While it may be easy to build the customer side of the equation you've got to build a vast network of merchants willing to accept payment and that's hard work. Especially if you're trying to convince them to re-price in Facebook Credits?<p>Sure, you could charge 1% but people have added credits to their Facebook account at some point and it probably cost you more than 1% to allow them to do that. How do people buy credits right now? All those cost Facebook more than 1%, right? I buy $100 of credits, it costs F8 a couple of bucks, I then spend $100 of credits and they recoup $1 of it in merchant fees? Doesn't sound like a good business model.<p>Beyond the need to create a financial model that makes sense and then go out to find merchants and convince them there's a massive risk of merchant fraud.<p>Fraudulent merchant X signs up for a F8 Merchant Account. Fraudulent customers A, B, C buy something with stolen credit cards for $100 each. Everyone disappears after merchant X receives settlement. F8 is out of pocket to the tune of the original $300, another $300 in reversals to their bank and then $30-$60 of chargeback fees. If that happens enough then F8 might even have its merchant account revoked... though they're probably big enough to avoid that.<p>It's an excellent money laundering channel too and there's a lot of financial regulation to navigate around that.<p>I know that this stuff can be overcome but it is hard to do and would be a major piece of work. This type of thing nearly sank PayPal back in the day.<p>Perhaps I'm missing the point here though?

The second biggest social network in The Netherlands (Hyves) introduced something like this in 2010. They mainly intended it to be used to pay back (small) debts to friends or relatives, but also made partnerships that enabled you to order food online or order drinks at a bar.<p>As far as I know, it did not really lift off, but this could be because Facebook overtook Hyves as the most popular social network shortly afterwards.

Facebook has demonstrated a completely utter disdain for interacting with their users. If something goes wrong with your "friend wall" or whatever, it's an inconvenience. If something goes wrong with your money, you want to talk to a human. Everyone knows you can't reach fb humans. When it's money, that matters. The work involved in turning that perception around is a huge hurdle to this idea.

Aside from the points the author makes, this would also improve Facebook's advertising model a lot. They would have purchasing information from basically every segment/product/niche/market out there.<p>You put an ad on Facebook. People click on it an buy with FB-pay. You then get a ton of marketing data to better aim your ads. Tine of purchase, day, credit card type, marital status (confirmed versus Fb status), income information, billing address, etc.<p>All in one convenient place. How much would businesses pay for that? A lot. Evidence? Call your local mailing list broker and ask for a quote.<p>Of course, this will set off what I call "the privacy wars". Where the government will step in after some single mother of three is scammed and the story is picked up by some mommy-blogger who then sells the story to the huffington post, who then sells the article to CNN, who then puts it on TV. Then FOX makes a deal out of it, republicans notice, and make some lobbyist-impregnated bill that includes the "single-mommy law for online privacy".<p>But, we've had this coming for a while.

This makes very good sense to me: CC payments are expensive (up to several percent), merchant accounts are difficult to come by, accepting international cards is annoying.<p>This is partly because of the fraud risk, partly because of VISA and MasterCard's duopoly. Facebook is pretty well situated to deal with both IMO.<p>And it's not just online payments: The current state-of-the-art in mobile-phone POS payments ("It's <i>exactly</i> like a credit-card! Except it's in your phone!") seems like a dead-end to me. Facebook is in a unique position to move into this area.

These articles make me wonder why everyone with a blog thinks they know better than the massive teams of engineers running these companies...<p>Do you really think Facebook doesn't have reams of data and analysis on this exact idea? I bet they've been analyzing the crap out of it for years and for whatever very good reason they have they haven't done it yet.<p>Now, I predict the company who will make a trillion on payments is Apple. They're set up quite nicely to tell the credit card companies to take a hike.

Dammit, then I'd have to reactivate my Facebook account.<p>And then Facebook would know everything I buy.

Too late, I think.<p>Facebook has scared off a lot of the "moms" out there by their bad bad bad privacy history. Do you really want to pay for things using their service?

It's worked well for Walmart (well, okay, aside from the whole "bribing people in Mexico" thing.) But people seem willing, and even eager, to bank with companies they know and trust.<p>The real problem is regulation. It is so, <i>so</i> much easier to sell ads than to navigate the international financial markets.

&#62; People will think twice about losing their ‘Facebook Credit Score’ over a few $ for an online presence they spent (literally) years building and cultivating.<p>Which keeps them from using that hypothetical service, because they don't want to risk losing the account over a transaction that went wrong.<p>Or maybe not. Who knows?

Seriously? Linking your checking account with Facebook?<p>It would definitely be the next step in user lock-in, but you'd start competing with banks and everyone else who offers a way to pay.<p>Now, I wouldn't complain if they bought some "bypass the credit card companies" service like Dwolla...

With 1/6th of the world population Facebook can very well release it own currency.

I think FB does not have to be a PayPal, and there are many good reasons outlined in these comments already why that is a bad idea.<p>However, it can become some kind of market place. It already knows user locality, it already has people flocking to it. It already has big brand stores sharing discounts and coupons to consumers.<p>All it needs to do is finish the last mile and allow those brands to actually have a "Facebook-only Sale", for example.<p>Also, it can become a great "local market place", and can help local businesses to sell to local customers.<p>TLDR: not just ads, and not necessarily a payment gateway, but a niche market place could be it.

I wouldn't trust or use something like this.<p>1) I don't trust Facebook to transact payments quickly or safely.<p>2) I don't want Facebook to take my money. I'm guessing Facebook would capitalize on this by exacting a higher rate than other options. Because they can. I want the max amount of money to go to the creators of a product, not to Facebook.<p>3) As it says, Facebook already knows everything about people. Should they really have access to our credit cards as well?

I fully agree. For a lot of people facebook is their identity, linking their identity to paiement is a logical step.<p>They could first allow people to exchange any amount of money with friends for free, add it to their mobile app so that everyone has it anytime. Other apps are doing that, and that's very useful.<p>And they should buy Stripe, bind everything together, displace amex, visa and mastercard.<p>Or may be that's the plan, but it's best to be silent ?

Its not possible to solve for everyone, the whole of web-communities !<p>Nerds and Geeks never trust facebook, but their moms and sisters do !

I heard through some friends that Swedish start-up Klarna is actually using your Facebook profile to evaluate probability that you are a real person. If you pay online using an e-mail address that has lots of friends on Facebook then the overall risk of the transaction is considered lower.

I agree with most of this article, except, if I was Facebook I would bill via the mobile networks.<p>Not really viable on the desktop, but certainly on phones.<p>There's no reason that I can think of why I can't be identified by my own mobile network and either charged at the end of the month or via my airtime.

Well, it would be GREAT also on mobile! All my friends have Facebook, if I could pay them with my phone and only their name I would do it all the time. (Like what PayPal tries to do, but there is not enough adoption)

Why not buying RIM and make a serious move into the smartphone market. Last time I checked RIM's market capitalization is a bit over $5bn and Facebook has tons of money in their pockets after the IPO.

I commented on another submission that was similar to this. <a href="http://news.ycombinator.com/item?id=4040519" rel="nofollow">http://news.ycombinator.com/item?id=4040519</a>

You know you don't actually have to click an ad for FB to make money? Companies pay money just to get that ad in front so many eye balls!

There is no way facebook has a billion active users. Official numbers are always very optimistic.<p>For example, a lot of brands and agencies register many,many pages on facebook, and even post content there. And Britney Spears is not really on Facebook, she just has someone have post stuff for her.<p>I'm sure Facebook is huge. But if they say a billion, it is probably closer to 500m.

&#62; To fight the money game you need extremely deep pockets.<p>Not really. You just need different kind of priorities. For example Diaspora challenges Facebook on the grounds where FB is the weakest - privacy. Facebook can't compete on privacy no matter how hard they try (and they simply won't even try since the whole FB is built on selling off privacy).

I can't take this article seriously because it's so terribly written.

why stop at credit card processing how about a Facebook Credit Card !

Had a similar idea for this - We'll probably play around with this at Kout as soon as we've sorted out our payments infrastructure - Here's a mockup I made a little while back using Twitter - <a href="http://bit.ly/Kd0ugW" rel="nofollow">http://bit.ly/Kd0ugW</a><p>= Inital Idea = You're perpetually logged into a social network, why not pair up a payment method and leverage that connection. Always be connected to a payment method/global checkout - authorised by a 4 digit pin.<p>There's an array of pro's as cons for this.<p>= Issues for Facebook (and Twitter) =<p>The hurdles to get setup as a Payment Service Provider, and have the capability to preform cross-border, cross-country transactions, dealing with multiple currencies, as well as boarding merchants outside of the US, is a complete bitch.<p>It would be completely out of Facebook's internal focus to build and maintain this - outsourcing/partnering is a different story.<p>= Facebook's Cut =<p>Facebook takes a 1/3 cut from developers for FB Credits. They can't take a 1/3 cut from credit card processing.<p>They'll realistically take 2.75 - 3.5% and that would just piss off their developers who are being charged a 1/3, unless FB reduce their 1/3 cut - which I doubt they'd do.<p>Facebook would (probably) make more cash using FB Credits than processing credit cards - The margins are rediculously low with card processing (varies on card type) - It's game of volume.<p>Unless you're PayPal who charge you 2/3% for sending money between PayPal accounts. When all they're doing is ACH transfers between "dynamic bank accounts" they've setup, which costs them under 5 cents to preform.<p>= The trust factor = with Facebook (Guy/Girl's in Social Commerce take notice here).<p>Consumer's/Users whatever you want to call them simply would not trust Facebook with their super sensitive data (Credit Card &#38; Billing Information). They don't have the best reputation when it comes to users data.<p>They might experience some success and sign up a few tech savy users - but ultimately - even if they sort out all of the technical &#38; logistical issues they will constantly face this one.<p>This is why social commerce isn't full circle, or shouldnt be. When was the last time you entered your credit card details into a Facebook app? would you?<p>Social Commerce is really the discovery of products, but when it comes to facilitating the transaction, consumers need to be out of the ecosystem where "public" data is flowing, their friends are talking to them, or irrelevant social data is distracting them.<p>Consumers feel incredibily uncomfortable entering sensetive data into a platform which they use with the mindset of "sharing".<p>Unless of course it could be masked under a "Pay by Facebook" option which doesnt require the user to type in and sesntive information - ha.<p>Those are just my thoughts, and of course you have risk, disputes, charge backs, being the ultimate target for russian hackers etc.<p>I could be completly wrong, but I think a third party needs to step in here.<p>Facebook and a Dwolla/GoCardless partnership - now that would be intresting - you can fake a credit card but you cant fake a bank account.

$10 billion? I don't think so.<p>VISA: $3.36 billion profit | DFS: $2.2 billion profit | AXP: $4.9 billion profit | MA: $1.9 billion profit<p>That's Visa, Discover, American Express, and MasterCard.<p>That's a $12.4 billion profit, if you take every aspect of all their businesses away from them across the board and basically acquire a complete monopoly in transactions. Their businesses go far beyond processing of course, so you'd really need to not only take over all transaction processing but then double the business.<p>Facebook processing payments is maybe a billion profit opportunity for them. Not chump change, but very far away from $10 billion.