Facebook Gives Up on Facebook Credits

Facebook has begun phasing out its Credits [1] virtual currency, which users had purchased from the social network to put toward buying everything from FarmVille’s virtual currency to live concerts. Instead, users will put real money toward those purchases, so that a U.S. user will pay in dollars, a British user will pay in pounds, etc. Facebook will transition all apps or games that sell virtual goods to local currency by year’s end.

“Since we introduced Credits in 2009, most games on Facebook have implemented their own virtual currencies, reducing the need for a platform-wide virtual currency,” the company said in a blog post [2] on Tuesday.

Facebook claimed that replacing Credits with local currency would let app developers set more consistent prices for non-U.S. users. Purchasing Credits using non-U.S. currencies required that the currency first be exchanged to U.S. dollars, then converted to Credits at the going rate of $0.10 per Credit. Facebook will revert any remaining Credit balances to the user’s local currency.

Facebook once appeared to have high hopes for Credits. Given its massive user base, Credits had the potential to become the default currency of the Internet, potentially proving Facebook with a integral position in e-commerce, and even the local online ad business. But the virtual currency never seemed to have caught on beyond Facebook's core gaming audience. 

Coinciding with the demise of Credits, Facebook said that next month it will begin rolling out the ability for its Web app developers—desktop and mobile—to enable users to purchase subscriptions, which will only be available on a per-month basis. In addition to Zynga, social gaming company Kixeye will be testing subscription billing by letting users of its Backyard Monsters game pay $9.95 a month to join an in-game club and receive perks like 1,000 of the game’s Shiny virtual currency. Users will be able to manage their app subscriptions through the payments tab within account settings.

Facebook launched its App Center [3] two weeks ago. There, users can purchase more than 600 Web and mobile apps through the social network. The ability for app developers to offer users a free trial before purchasing a subscription will likely boost downloads as well as the adoption of subscription billing for the App Center's paid apps.