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We’ve been saying for a while that Facebook’s payment platform is a huge opportunity for the company to start making serious cash but there’s one issue with that logic: the majority of users don’t have credit cards. While nobody knows the exact number of Facebook users with credit cards, the most recent estimates are that only around 30 percent of Facebook users 25 percent of internet users have access to a card. The other 75 percent either have a mobile phone, that they can pay with via Boku or Zong, or are out of luck when it comes to making an online transaction.
The market for credit card transactions is still huge though. Even the iPhone bills applications to your iTunes account and so far over 1 billion applications have been downloaded, many of which have been paid for. Facebook clearly wants to provide a service which is similar to the Apple iPhone but there is still a huge market which Facebook isn’t tied into and is currently funding a large portion of the platform economy.
One issue with mobile payment solutions is that the barrier to purchase is so low that it’s ripe for abuse. Over the past couple weeks I’ve discussed the developer and ad network race to the bottom which ended in SocialHour and SocialReach being shut down (although they are expected to return at some point). Mobile payments were behind a lot of the ads being offered and even today, there are a large number of IQ quiz ads that take advantage of reverse bill SMS payments.
While I’d expect the industry to evolve as virtual gifts and virtual currencies become more widespread, there is still a high risk of abuse and that’s something Facebook most definitely wants to avoid. With so much revenue generating opportunity though, it’s hard to ignore. With the majority of Facebook’s user base being international, the real question is not if but when Facebook will become involved with mobile transactions.
Update
After thinking about the math for a minute I realized there was an inaccurate association. While 75 percent of internet users may not have access to a credit card, nobody knows which percent of Facebook users actually have a credit card. While the assumption is that a large number don’t Facebook could contain only those internet users that have credit cards (although that’s highly unlikely).
Update 2
Some of the commenters seem unclear on my numbers which is understandable 
Here’s the most recent logic: “25 percent of internet users have access to a credit card” does not inherently mean that only “25 percent of Facebook users have a credit card”. The reason being that a large portion of registered Facebook users may actually have a credit card. Also, when I say credit card that can be a debit or check card as well.
Facebook disabled my profile for not apparent reason and I have tried for over 3 weeks to get it back into an active mode. I have send them over 15 e-mails, my friend have send them e-mail and no reaction at all.
No customer service and Facebook is planning to get into credit card payments. Good luck, with the administrative issues at hand. The industry will hopefully make Facebook a more customer service oriented company.
Daniel
I’m really surprised that the majority of users don’t have a credit card. In fact, I read this several times; this seems so unlikely. Something is amiss. Also, there is a contradiction in this blog between the first paragraph and the update. In the first paragraph we read “most recent estimates are that only around 30 percent of Facebook users 25 percent of internet users have access to a card.” Then in the update we read “While 25 percent of internet users may not have access to a credit card,”…so which is it? 25 percent DO or DON’T have access to a credit card?
Just doing some quick skim research, not sure I agree with your numbers or logic.
Why would you need to have a credit card to make payments, couldn’t you do that with a debit card or checking card, too? Debit card comes with any basic checking account.
Also here’s some quick research:
Our users are a bit different than Facebook. However, I don’t know where they got that user statistic below…
In a 2004 study of credit card usage by undergraduates, conducted by the student loan lender Nellie Mae, 56 percent of freshmen reported that they started using their first credit card at age 18. By the time a college student is in senior year, 56 percent of them have four or more cards with an average balance of $2,864. (http://www.creditcards.com/credit-card-news/credit-card-usage-millennial-generation-1276.php)
Nearly one-third (30 percent) put tuition on their credit card, an increase from 24 percent in 2004, when the study was last conducted. In total, 92 percent of undergraduate credit cardholders charged textbooks, school supplies, or other direct education expenses, up from 85 percent in the previous study. Students who used credit cards to pay for direct education expenses estimated charging $2,200, more than double 2004’s average of $942.
Eighty-four percent of undergraduates had at least one credit card, up from 76 percent in 2004. On average, students have 4.6 credit cards, and half of college students had four or more cards. The average (mean) balance grew to $3,173, higher than any of the previous studies. Median debt grew from 2004’s $946 to $1,645. (http://www.nasfaa.org/publications/2009/cnslm041409.html)
“most recent estimates”? Where’s the link to a supporting article? Until I see one, I have to assume that you’re talking about a survey of 100 people, 75 of which are in junior high.
I agree with Glen. Without backing up the claims with hard facts this article is absolutely pointless. Next time you should at least link to the source of your knowledge.
So what about the 17 and under users how many of them are there I doubt most of them have credit cards as well as about 1/2 the 18-21 year olds.
Hi there
When I did research earlier this year I found that in the US only, 74.9% of the U.S. families surveyed in 2004 had credit cards , 76% of undergraduates and 41% of college students.
Sources are:
Federal Reserve Bulletin, February 2006
Nellie Mae, “Undergraduate Students and Credit Cards in 2004: An Analysis of Usage Rates and Trends”)
Student Monitor annual financial services study, 2008
Given that over 60M users of Facebook are from the US I’d say there’s a decent amount of people who can pay by credit card
Facebook are not asking for credit card number for this majority of users. As a web designer, i’m using Facebook as a very powerfull marketing system. Company like budweiser use Facebook too for their contest and i’m sure they have noting to say about the fact that they have to give a CC number to pay.