Under the deal, PayPal will become a payment option for purchasing Facebook Credits, which are still in use only sparingly in certain apps and games. Considering the burgeoning size of the micropayments business model -- especially via transactions inside social games -- the Facebook Credits platform could eventually be a huge revenue driver for the massive social network.
The news reveals that Facebook's agenda is not to disintermediate or eclipse PayPal, and that likewise PayPal doesn't perceive the Facebook Credits initiative as a direct competitor. We think it's a good move on the part of both companies, in that working together could be more lucrative for each site than trying to battle head-to-head. It also means that folks without access to credit cards will be able to purchase Facebook Credits more easily.
The deal also specifies PayPal integration for advertisers, who will be able to purchase Facebook Ads via its payment platform. Though less significant than the partnership on Facebook Credits, it does offer a nice alternative for advertisers who prefer to manage transactions via PayPal.