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The app, called Send Money, also allows users to send Facebook friends an e-card with the money.
A PayPal blog post markets the app squarely at the gifting market, stating that the app can be used, “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.”
According to the post, Americans send 500m e-cards each year, so it's clear to see why PayPal wants a piece of it.
Additionally, 80% of PayPal’s users actively use Facebook, so it would appear to be the perfect place to trial a new service.
But as is usually the case when Facebook is involved, there will be questions over the app’s security.
A report published yesterday in USA Today discovered that the social network records the browsing history of everyone who visits Facebook, even if they didn’t sign up for an account.
So every time you visit a site with a Facebook Like button or other Facebook plugin, a cookie records this data, which is then stored for 90 days.
Facebook told USA Today that it only uses data collected via cookies to help improve security and its plugins, but the sheer volume of data it is collecting will add fuel to the privacy row.
Paul Smith, managing director of Techlightenment, says he thinks that people will still use the app since PayPal is seen as a trustworthy brand.
I think people are polarised – there are some who just won’t touch it and there are others who will trust PayPal with online transactions more than they would probably trust one of the big banks."
He went on to say that people trust PayPal as an online expert, so it’s less about Facebook and more about the financial brand's reputation. “But it will be interesting to see how they use the data and whether it starts showing up in people’s news feeds," he added.
Smith says the app is part of a larger trend for companies aiming to create a Facebook app that people will use everyday, rather than launching short term campaigns to boost their brand recognition.
“A lot of companies, like the Guardian, are now launching persistent apps that give them a consistent communication tool with their user,” he said.