Xiaonei, the leading social network in China, and also a Facebook copycat, announced today that it has released a payment platform for applications. The China Web 2.0 blog reports that the system leverages the company’s Xiaonei Dou, which is a virtual currency that users can purchase via the mobile phone, Alipay, or Yeepay. For a year there has been significant buzz about the potential of Facebook launching a payment platform but nothing has been done yet.
As far as I know this is the first social network to officially announce a payment platform. While I have yet to look at the specifications of the system, this is a major announcement and I’d imagine that other platforms will follow suit. When it comes to virtual currency, Asia has been leading the pack for years, as they have been selling digital goods over social networks for users to customize their personal avatars.
The model has proven profitable. As we wrote back in May, 51.com, a competing Chinese social network, has achieved cash flows of over $44 million through the sale of virtual goods. The virtual currency model has been used through numerous offer exchange programs on Facebook applications, but so far, none of this has been tied directly to Facebook the company.
Earlier this year, Facebook posted on the developer forums that they were looking for developers that wanted to beta test their payment system. Unfortunately since then, there has been very little activity. As many have suggested some of this is due to internal conflict over whether or not a payment platform is even worthwhile. It looks like Xiaonei will be the first to test out whether or not this works. My guess is that we’ll see other social networks hop on board in the very near future.