Facebook plans to test a new service aimed at making it easier for users to make purchases on their mobile devices.
The social networking site is exploring ways to allow people to make purchases with just their Facebook login on partnering e-commerce mobile apps.
The service would use payment information that shoppers store on Facebook to automatically complete checkout forms of certain apps.
The app would then handle the payment processing, not Facebook.
Facebook confirmed in a statement that it was working on a "very small test" designed to "make it easier and faster for people to make a purchase in a mobile app by simply pre-populating your payment information".
But the company said there was no timetable for making the service available to its customers.
If rolled out, the new payment system would pit Facebook in direct competition with PayPal, as well as e-commerce firms like Braintree.
Spokeswoman Tera Randall said in a statement that Facebook has a "great relationship with PayPal, and this product is simply to test how we can help our app partners provide a more simple commerce experience".
The test, she added, would not involve moving payment processing "away from an app's current payments provider, such as PayPal".
Nonetheless, shares of PayPal's owner, eBay Inc fell on news of the potential competition. The stock closed down $1.05, or 1.9%, at $53.18.
Facebook's stock closed down nine cents at $36.56.
Forrester Research analyst Denee Carrington believes Facebook will face an uphill challenge in offering mobile payments even though the company has been building up its database of users' credit cards.
"Consumers want safe, seamless and convenient mobile payments and there are a growing number of competitors that consumers trust more - such as PayPal, Visa (V.me) and others," he said.
SOURCE:SKYNEWS