Facebook Formally Announces Payment Terms for Its Universal Virtual Currency, Credits

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We’ve been covering Facebook’s experiments with its Credits virtual currency closely here on Inside Facebook over the last year. Today, Facebook has officially released some details about the payments terms of the program for the first time. Although Facebook isn’t giving developers a roadmap for what to expect in the future, it’s another step in Facebook’s gradual process of becoming the currency merchant of record for virtual goods transactions on the Facebook Platform.

Most important in today’s published terms is Facebook’s specific disclosure of the 30% revenue share it is taking for all Credits purchases — a percentage we’ve been hearing since last May. In other words, when a user purchases Facebook Credits in a game or application, 30% goes to Facebook, while 70% is delivered to the developer. Obviously, this is a higher fee than many other payment methods require, but Facebook wants to establish a high starting point to establish the value proposition with developers and turn this into a meaningful revenue stream over the long run. To get it started, Facebook’s going to have to prove out the results compared to the many third party virtual currency payment providers and aggregators operating on the platform with developers.

Facebook’s Ethan Beard says that Credits is still in a “closed beta” at this point, but developers can now express their interest to Facebook and request to join the companies that are already testing Credits, including Zynga, Playfish, Playdom, CrowdStar, Slide, RockYou, and 6waves. Beard says Facebook is “not against” testing Credits with smaller developers too, it’s just “more cost effective” to test with larger ones.

In addition to the release of the official payments terms, Beard says Facebook plans on launching several consumer marketing campaigns to make sure Credits is a success, including “user education, feeding Credits, and bulk discounting.” Just a few days ago, Facebook officially announced it would be integrating PayPal as a Credits payment option, and that implementation should be launching within the next few weeks.

Overall, 2010 is definitely proving to be the year that Facebook takes a more active role in the virtual goods ecosystem that has grown up on the Facebook Platform. For more data on the size and future of the market, see our recent research report: Inside Virtual Goods: The Future of Social Gaming 2010. We’ll of course continue tracking the market as it evolves.