Facebook and PayPal announce a deal: is it to boost international business?

Well, it’s probably less important than the Facebook news and opinions I wrote about earlier today, but it’s news!

Facebook and PayPal will soon work together to offer an online payment solution for both virtual goods and ads on the king of social networks (and since January the prince of traffic).

The deal is meant to offer an extra service to both Facebook users and marketers.

For marketers, it means they will be able to pay for their ‘social advertising’ with eBay’s popular payment system.

Facebook users will be able to fund their virtual currency account using PayPal to buy and send all these virtual goodies Facebook users tend to send each other (who ever started that, was it Second Life?).

The announcement makes me realize that this is a revenue stream for Facebook, I forgot to mention in a recent post. However, there is not much to mention because, except for the folks at Facebook,  no one really knows what the virtual goods business represents for the company.

So it’s guess work. Colin Gillis, an analyst at the Boston Consulting Group, gave it a try and said Facebook could make as much as $100 million selling virtual stuff. And according to PayPal the global market for digital goods is “worth between $3 billion to $6 billion and growing at least 50 percent annually”. Possible, don’t really know, read it on Reuters.

According to a blog post on the WSJ, the move would also be aimed at boosting Facebook’s international business. That seems acceptable and the article is worth reading.

However, when Jessica E. Vascellaro writes in her WSJ post that “Facebook hopes the move will make it easier for small companies in countries such as Germany and the Netherlands, where credit card use isn’t prominent, to run advertising campaigns on Facebook” I can only raise my eyebrows.

Now, people in (some) European countries tend to use credit cards less than people in the US but saying that credit card use isn’t prominent in the Netherlands and Germany is nonsense, certainly in business.

For the rest, she might have a point.

Read PayPal’s press release about the deal here.

Bookmark and Share

Join me on Twitter

Join me on Digg

Subscribe to the newsletter

Join me in the Social Marketing Forum