The online auctioneers have said at the 'Startups' Smash Summit' in New York this week that they are working on a mysterious project with social networking dominators, Facebook.

Robert Scoble - Technology blogger - revealed that PayPal will be integrating with Facebook and expanding on its current partnership with Zuckerberg and his team. These revelations could pave the way for the future fad, social media shopping.

Last year, PayPal launched its new micropayments product which Facebook integrated immediately, this came after Facebook announced that credits could now be purchased using PayPal.

The most likely scenario is that Facebook will be teaming up with the X.Commerce platform which is a division of eBay and is expected to combine key elements of eBay, PayPal, Magento and GSI Commerce.

Although eBay and PayPal won't reveal the details of the collaboration, the head of X.Commerce Community, Naveed Anwar said: "We've been talking for a while about how the four megatrends of mobile, social, local and digital will change commerce. Yesterday at f8, Facebook made some great announcements that will change social networking. When social and commerce join together great things will be possible and developers will be able to monetize these new developments very quickly."

As social media shopping becomes more prominent and popular, and as more money passes through Facebook via games, apps and other purchasables there is a huge potential for these type of collaborations.

PayPal are expected to release an in-store payment system as well as a new payment platform for merchants in the coming months.

Facebook New York