Comments on: Why Social Nets are Shying Away from Payments

By: chudson

chudson — Tue, 13 Jan 2009 17:42:00 +0000

Dave,rnrnThanks for the comment! I don’t actually think a payments system based on social identity is necessarily superior. I think the best payment system is one where the person accepting payment has a high degree of confidence that the user is in fact authorized, where there’s a low probability of repudiation, and where there’s minimal friction. It’s clear that Facebook has more “real” people than other social networks, there are still plenty of fake accounts.

By: chudson

chudson — Tue, 13 Jan 2009 14:42:34 +0000

Dave,

Thanks for the comment! I don't actually think a payments system based on social identity is necessarily superior. I think the best payment system is one where the person accepting payment has a high degree of confidence that the user is in fact authorized, where there's a low probability of repudiation, and where there's minimal friction. It's clear that Facebook has more “real” people than other social networks, there are still plenty of fake accounts.

By: dcfemella

dcfemella — Tue, 13 Jan 2009 13:22:00 +0000

I can’t imagine companies who are in this kind of area. They have to deal with so many other issues that even banks don’t have to deal with. If I were Facebook, I would hold back indefinitely and let other companies deal with the flow of cash around the internet. Great post!

By: davemc500hats

davemc500hats — Tue, 13 Jan 2009 13:09:00 +0000

good post. not sure i agree with all parts of it, but it is true that payments requires focus to be successful. arguably it’s important enough that FB could choose to make it such a priority, but at the moment i’d agree not clear they’ve made that bet (or maybe we just don’t know to what extent).rnrnotoh, i do think your last 2 observations are also correct, and that “blessing” 1 or more payment solutions on platform / with Connect would help improve conversion for 3rd-party developers, possibly even on other retail / e-commerce sites.rnrnan alternative way to think about this issues is this:rnrn* do you believe that a payments system based on “social identity” (one where portable identity & friend lists exist & are available features) is superior to a normal payments system? rnrnif you think it isn’t, then your logic probably holds. rnrnif you think it is, then it’s likely that all the investment in features & support is worth the ROI.rnrnthinking about Facebook as a social network with payment features is one perspective. another would be to think about Facebook as an identity & payments & applications platform with social networking features

By: dcfemella

dcfemella — Tue, 13 Jan 2009 10:22:58 +0000

I can't imagine companies who are in this kind of area. They have to deal with so many other issues that even banks don't have to deal with. If I were Facebook, I would hold back indefinitely and let other companies deal with the flow of cash around the internet. Great post!

By: davemc500hats

davemc500hats — Tue, 13 Jan 2009 10:09:15 +0000

good post. not sure i agree with all parts of it, but it is true that payments requires focus to be successful. arguably it's important enough that FB could choose to make it such a priority, but at the moment i'd agree not clear they've made that bet (or maybe we just don't know to what extent).

otoh, i do think your last 2 observations are also correct, and that “blessing” 1 or more payment solutions on platform / with Connect would help improve conversion for 3rd-party developers, possibly even on other retail / e-commerce sites.

an alternative way to think about this issues is this:

* do you believe that a payments system based on “social identity” (one where portable identity & friend lists exist & are available features) is superior to a normal payments system?

if you think it isn't, then your logic probably holds.

if you think it is, then it's likely that all the investment in features & support is worth the ROI.

thinking about Facebook as a social network with payment features is one perspective. another would be to think about Facebook as an identity & payments & applications platform with social networking features

By: denis

denis — Sun, 04 Jan 2009 15:34:52 +0000

great post. We may add that the payment on twitter like twitpay, tipit or tipjoy are good examples that payment is out of the media itself.

By: chudson

chudson — Sat, 03 Jan 2009 02:41:25 +0000

Not only is Facebook under more short-term revenue pressure than eBay was at the time, the eBay marketplace business model required a more coherent payments solution to power its growth. It's unclear to me what Facebook's ultimate aim is (marketplace? social network? ad network?) and hence how important it is to “own” the payments piece.

By: Nathan D

Nathan D — Sat, 03 Jan 2009 01:27:02 +0000

Seems the eBay/PayPal experience may be instructive for Facebook (etc) — if there is a healthy ecosystem of 3rd parties forming, let them fight it out and see which emerges as most popular. Still, I have to believe that unlike eBay in the earlier days, Facebook is under tremendous pressure to drive revenue growth to justify sky-high valuations, so perhaps they will need to accelerate standardization.