Google Inc (GOOG), eBay Inc (EBAY): Can Facebook Inc (FB) Gain From Testing Mobile Payment Arena?

You can’t accuse Facebook Inc (NASDAQ:FB) of just resting on its laurels, the company just confirmed yet another new product, this time a mobile payment service. In a report from AllThingsD, the company confirmed that it was preparing to test a mobile payment service that allows purchases to be made with just a Facebook Inc (NASDAQ:FB) login. This isn’t the first time Facebook Inc (NASDAQ:FB) has tried to get a slice of e-commerce, but this one is designed to ease mobile transactions unlike their previous Credits system. Their ill-fated first attempt was shut down primarily because the namesake secondary currency complicated things.

Facebook Inc (NASDAQ:FB)

What difference can mobile payments make?

The newest iteration, if successful, could significantly improve their ad service, giving the company precious insight into our buying habits. As it stands, advertising revenue accounts for 88% of total revenue for the company, according to their most recent earnings release. Improving the efficacy of advertising with shopping data could have a tremendous effect on the company’s revenues. As of June 30, the company reported 819 million mobile monthly active users, just convincing a fraction of them to use their payment system could be a big coup. And if the company decides they then want to join the payment processing business it has the potential to become a major source of revenue.

While the company has been clear to say they are not entering eBay Inc (NASDAQ:EBAY)’s turf with this test run of the service, it isn’t a stretch to think they might at some point in the future. eBay Inc (NASDAQ:EBAY)‘s PayPal unit is a major source of revenue for the company and commands a massive amount of processing traffic. In their most recent quarterly earnings release, PayPal brought in $1.6 billion of the company’s $3.9 billion in revenue. It is hard to ignore the lure of such a lucrative market, particularly if Facebook Inc (NASDAQ:FB)’s user base gets used to letting Facebook Inc (NASDAQ:FB) handle their sensitive financial data.

Can Facebook Pull It Off?

Convincing the user base might be the company’s biggest hurdle. As it is the social giant doesn’t have a shining security track record and it isn’t clear that the user base will trust it with their credit card numbers and purchase histories. Hard to imagine that the company that made its name on people over sharing would have trouble convincing them to share, but when it comes to financial matters incumbency matters.

Even if Facebook Inc (NASDAQ:FB) doesn’t venture into the payment processing business, the company still can gain tremendously from data it can glean from the payment service. Given the number of choices available in today’s market, user data has become the biggest differentiator for successful companies. That’s why Google Inc (NASDAQ:GOOG), Square, every major retailer and the entire credit card industry is interested in offering their own payment solution.

Companies like eBay Inc (NASDAQ:EBAY), and more recently Groupon Inc (NASDAQ:GRPN) have scrambled to get their payment systems in place in physical storefronts. This move is likely an effort spur wide adoption. Groupon Inc (NASDAQ:GRPN) just landed a major hardware partner, inking a deal with VeriFone Systems Inc (NYSE:PAY) to offer Groupon’s payment service on VeriFone’s terminals. This puts Groupon’s service on a point of sale device that holds significant market share in most markets. Of course, Groupon Inc (NASDAQ:GRPN) isn’t the only company to make their way on to VeriFone Systems Inc (NYSE:PAY)’s POS devices, Google Inc (NASDAQ:GOOG) and PayPal already have similar deals in place, but it is still an important step.