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Facebook to developers: Get ready for Credits

With the full launch of Facebook's virtual currency growing closer, the company has spelled out some of the terms that were heretofore only rumored.

Facebook's virtual currency, "Facebook Credits," is getting very close to its full launch: a post on the Facebook developer blog explains some of the full terms of the system and what developers can expect as the currency continues to roll out slowly.

"Today more than 500,000 applications exist on Facebook, and the virtual goods within those applications (particularly games) have become an increasingly valuable part of the user experience," the post explained. "By providing a single, cross-application currency, our goal is to [make] transactions simpler for users, leading to a higher conversion rate for developers. Specifically, our early testing has shown that users paying with Facebook Credits are significantly more likely to complete a purchase than the average Facebook user."

Developers will need to believe in that incentive: Facebook plans to take a full 30 percent cut of Credits transactions. Some developers have already denounced that as too expensive. Facebook will have to give them the hard sell in order to win them over, as many third-party currency start-ups have already flooded the developer platform, and there are consequently lots of other options out there.

A Facebook Credits preview. Facebook

Facebook assures developers in the blog post that it "will explore a number of ways to improve the program, and increase conversion and net revenue for developers, including user education and marketing, testing innovative ideas such as bulk discounting, and seeding Facebook Credits to drive discovery and repeat engagement."

Multiple industry sources have indicated to CNET and elsewhere that Facebook will be formally launching Facebook Credits at the third installment of its F8 developer conference, which is taking place on April 21 and 22 in San Francisco.

But in contrast to previous F8 developer launch events, during which developments were kept behind closed doors up until the event itself, Credits have been actively tested by select Facebook developers for well more than six months. They're also used internally as the currency for Facebook's own "gift shop," which last fall was expanded to include some sponsored gifts from partner companies and nonprofits.

Last week, Facebook announced that it would partner with the eBay-owned PayPal for transaction technology, adding to an array of credit cards, 15 international currencies, and mobile-payment start-up Zong. It shows that Facebook's road map has changed quite a bit from the days when the company was plotting a competitor to PayPal itself; with the most successful applications built atop Facebook dominated by social games, a virtual currency makes far more sense.