Move over, PayPal: Facebook confirmed a report by AllThingsD that it will test a new payments product that will allow Facebook credentials to be used by users completing transactions on mobile applications.

Sources told AllThingsD Facebook users who have previously supplied their credit-card information will be able to complete purchases on partnering apps without being required to re-enter their billing details.

The pilot partner in the social network’s test is men’s apparel flash-sale shopping site JackThreads, which has been highlighted by Facebook Chief Operating Officer Sheryl Sandberg for its use of the custom audiences advertising feature.

AllThingsD believes JackThreads may have been chosen because users in its target demographic are also likely to be game players, many of whom have already shared their credit-card information with Facebook.

Another potential goal if Facebook chooses to proceed with this product, according to AllThingsD, is collecting data on the shopping habits and preferences of its users.

A PayPal spokesperson issued the following statement to AllThingsD:

We have a great relationship with Facebook and expect that to continue. Our customers love using PayPal on Facebook. We’ve been investing in mobile payments since 2006, and last year, 10 percent of our total payment volume — $14 billion — was from mobile devices. However, we always welcome competition and are looking forward to seeing what Facebook will announce.

And Forrester Research Retail Analyst Sucharita Mulpuru was skeptical, telling AllThngsD she would be “surprised” if Facebook had the credit-card information of more than 10 million U.S. users, and adding:

Nobody trusts social networks with their financial information, and they are certainly not going to trust Facebook. Maybe they have a few million people who have bought something on things like FarmVille, but that does not a network make.

PayPal is well-suited because it has more than 100 million accounts with real people who have trusted it with their information. To be a latecomer to the game in something as complex as payments, (Facebook) would be better off buying Square.

Readers: Do you think Facebook will eventually launch a payments product?

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