Facebook, PayPal partner on advertising, virtual goods payments

Facebook is tapping eBay-owned PayPal to power payment options for advertising and virtual goods on parts of the site.

Users and marketers can choose PayPal as an option for purchasing ads and Facebook Credits, a system being tested in a small number of games and applications for buying virtual goods on the site.

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It looks like, at this time, Facebook is content to outsource payments services to its partners to help accelerate growth in virtual goods and self-serve advertising on the site, although it could develop its own payments system much later. At the same time, PayPal is trying to broaden its reach this year by cultivating a developer community that can come up with unique applications. A deeper relationship with Facebook could open the door to all sorts of interesting social payment applications.

It certainly helped that Dan Levy, who heads payment operations at Facebook, spent seven years at PayPal in a variety of roles from product manager to European head of risk management and that Peter Thiel, an early Facebook investor and board member, was a co-founder of PayPal.

“We also want to continue embedding ourselves deeply in other platforms,” Osama Bedier, PayPal’s vice president of platform and emerging technology, told us last week. “We want payments startups to leverage what we’ve built.”