Facebook's payment platform changes its currency
The social network's virtual currency, called "credits," will soon be defunct and people can pay in their local currency. This could be a new way for Facebook to grow as a payment platform.
Facebook made a simple announcement today -- its virtual currency, "credits," is to become real currency, such as dollars, pounds, or rupees. Despite this being a seemingly straightforward notice, a lot can be read into this plan.
It points to the social network looking for additional ways to make money besides advertising and it shows the company's goal to grow as a payment platform embarking on a similar path to Apple with its iTunes store.
The idea of Facebook credits were first debuted in 2008 when the social network changed the monetary units for its "gifts" into "credits," rather than U.S. dollars. Then, throughout 2009 and 2010, the company rolled out a way for developers to work credits into their apps on Facebook's platform.
These credits can be used on hundreds of games and apps available on Facebook, such as Farmville, and be spent at select retailers, like Target. According to The New York Times, Facebook takes 30 percent of sales, which brought it 15 percent of its revenue last year.
Here's an explanation of the currency change that Facebook announced on its developer blog today:
By supporting pricing in local currency, we hope to simplify the purchase experience, give you more flexibility, and make it easier to reach a global audience of Facebook users who want a way to pay for your apps and games in their local currency. With local pricing, you will be able to set more granular and consistent prices for non-US users and price the same item differently on a market-by-market basis.
In addition to changing the currency, which may help entice developers to sell their apps via Facebook, the social network also announced today that developers can initiate monthly payment plans, rather than just a one-time payment.
Here's what Facebook wrote on the blog:
Many developers successfully monetize their apps with one-time purchases of virtual items. Beginning in July, we are launching subscriptions as another way for you to build your businesses on Facebook. With subscriptions, you can establish a recurring revenue stream and offer updated content or premium experiences for a monthly fee.
Ever since Facebook went public last month, investors have been concerned about plummeting share prices and ways for the social network to monetize its growth. In response to these worries, the company has been openly exploring mobile advertising. It seems Facebook is also looking to show initiative for money-making by changing its currency from credits and offering the app subscription model.
According to the Facebook blog, the currency changes are slated to happen in July and will be available on mobile as well as the Web.