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Pay it forward on Facebook

Kathryn McConnachie
By Kathryn McConnachie, Digital Media Editor at ITWeb.
Johannesburg, 18 Nov 2011

PayPal released a social payments app on Facebook yesterday, allowing users to send money to their friends.

Send Money” gives users the option of simply sending money, or sending money and a digital greeting card or e-card.

The app allows money to be sent to anyone on a Facebook friend list, or there is also the option of entering a friend's e-mail address. Users are, however, required to have a PayPal account in order to use the application.

Since it is a peer-to-peer transaction, there are no transaction fees involved, but the standard PayPal limits and international fees apply.

PayPal's business model involves earning interest on balances kept in user accounts. According to All Facebook, even when money is technically only in PayPal's hands for one to three days, the funds are moved to overnight investments to earn interest.

“Overnight investments only add up to real earnings when large amounts of money are involved, and PayPal gets to grow its account base by making its services available to a larger audience through Facebook,” says All Facebook.

Going to the masses

PayPal says it is taking its service to where people are connecting. “According to Facebook, about 50% of its 750 million users log in daily and average about 130 friends. And, the Greeting Card Association estimates that Americans send 500 million e-cards annually.”

The application is not an official partnership with Facebook, but rather a standard application simply developed for the platform.

Facebook has its own virtual currency called Credits, but reportedly has no intention of getting into the peer-to-peer payment space due to the fraud risks.

Senior product marketing manager for PayPal, JB Coutinho, says nearly 80% of active PayPal users actively use Facebook.

“Our new Send Money application on Facebook allows users to turn those wall posts into actual gifts. Facebook users can now send money to their friends and family whether it's for a special occasion like a birthday or anniversary or just because, along with an e-card, photos, videos and a message.

“In a world that's turning increasingly to social media, we are giving our customers the flexibility to send their money to whoever they want, whenever they want and for whatever [occasion] they want,” says Coutinho.

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