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PayPal to be a way to buy ads and goods on Facebook

February 18, 2010 | 12:36 pm

Facebook and PayPal have announced a strategic partnership that will allow advertisers and users of the social network to pay for advertisements and buy virtual goods using their PayPal account.

Users will be able to apply PayPal within Facebook's Credits service, which is used to acquire music, e-cards and virtual goods within applications. It's quickly becoming the social network's currency.

PayPal integration into Facebook Credits gives users another payment option when acquiring virtual gifts. Prior to the announcement, users could only buy credits with major credit cards or through purchases on their mobile phones. Facebook's phone purchases are powered by mobile-payment company Zong.

Facebook advertisers will also have the option of paying for ads with PayPal. Previously, Facebook advertisers needed to link a credit card to their accounts in order to place ads on the site. The option will be launched within the next few weeks.

The partnership between Facebook and PayPal is extremely important to both sides. Buying Facebook credits or ads is now much easier for PayPal users, which should help the social network generate more revenue.

The deal is arguably more important for PayPal. The EBay-owned company has been working hard to capitalize on the burgeoning in-app payment market.

Last year, PayPal announced the launch of PayPal X, an open platform that allows developers to use application programming interfaces to integrate PayPal into their Web applications. The company claims that it is currently working with over 15,000 developers.

The deal also puts to rest the idea that PayPal and Facebook are competitors.

Anuj Nayar, PayPal's director of communications, said that the partnership "makes it really clear that Facebook and PayPal aren't competitors."

Nayar also said that PayPal's relationship with Facebook is in its infancy. He wouldn't provide any specifics on the length of the deal or how the partnership will work, but he did say that PayPal's integration into Facebook Credits and its advertising platform is "the beginning of a long-term strategic partnership" between the companies.

-- Don Reisinger

twitter.com/donreisinger

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