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Paypal On Facebook: A Big Win for Mobile Commerce

Facebook now accepts Paypal as payment, which not only will make it easier for users to purchase Facebook credits, but can serve as a great way for Paypal to make a stronger mobile presence.

The new partnership actually encompasses a few areas of Facebook's payments. Along with Facebook Credits, you'll be able to use PayPal to purchase Facebook Ads.

This is big news for both companies. PayPal has been trying to establish a greater presence in micropayments and on Facebook itself. And Facebook will now make it easier for PayPal's 81 million users to quickly stock up on ads and buy its credits, which are only going to become more important on the site going forward. Other payment options for Facebook include standard credit cards and mobile phones (using Zong).

One other reason why this is interesting: given Facebook's interest in extending itself beyond Facebook.com through services like Facebook Connect, it wouldn't be surprising if it started prompting people to start "Paying With Facebook" on external sites, which would make it competitive with PayPal. Given how nascent Facebook payments are this would likely be a long ways off (if it's even coming).

On the phone front, Facebook Connect has already crept into many mobile apps as a uniform sign-in. As the iPad ramps up to launch, PayPal can piggyback on Facebook's aggressive plans. The opportunities are multilayered.

In one simple example, Facebook Connect is already used as a log-in for several video game applications. As 3G and Wi-Fi become more commonplace, Electronic Arts, ngmoco and other major mobile companies are creating exclusive online communities similar to XBox Live and PlayStation Network on the XBox 360 and PlayStation 3, respectively. However, for smaller companies not willing or able to make the complex infrastructure, Facebook Connect serves as an easier way to establish player identify, track unique statistics and, in unison with Facebook, support purchases.

EA just announced the hardcore gridiron game John Madden Football for Facebook -- yes, for that Facebook -- so it's extremely likely we'll see interaction between mobile devices, which already have Madden, and Facebook. (In fact, EA recently bought Facebook game company PlayFish for $400 million.) We will also see Facebook purchases, many through PayPal, become more important to the mobile world. The iPod Touch/Mac hybrid iPad will hasten how quickly this happens.

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