The Pros And Cons Of Facebook Credits, For Merchants

By David Cohen Comment

Merchants have complained about the cost of Facebook Credits, but commerce vendor Milyoni says that there are twice as many pros as cons to the digital currency.

The vendor illustrated this in a fairly comprehensive white paper for merchants.

The benefits of Facebook Credits for merchants are:

  • Access to a marketplace of nearly one billion users;
  • Simplified approach to purchasing virtual and digital goods;
  • Consolidation of virtual currencies across multiple providers;
  • Secure payment and billing environment;
  • Available in 47 currencies;
  • Ability to purchase and gift Facebook Credits in many ways (credit card, PayPal, mobile, retail stores);
  • Growing base of merchants that reward customer loyalty and buying with credits;
  • Effective mechanism to convert fans into paying customers of premium or exclusive services; and
  • Facebook Credit distribution can be a low cost promotional effort to increase brand awareness or customer conversions.

Potential inhibiting factors are:

  • The 30 percent transaction rate is more than many merchants and content providers are willing to accept until the market demonstrates a return on investment;
  • Facebook is introducing several changes, such as timeline and newsfeed advertising, which some users are finding too invasive, possibly causing them to exit the platform;
  • Charging 50 Facebook Credits for digital goods is prohibitive in some countries;
  • Any breach in privacy or security, given the media’s willingness to hyper-cover these issues involving Facebook, could create major resistance to using the social network for commerce; and
  • The novelty and enjoyment of Facebook may diminish as users turn to other social networks, like Pinterest or Twitter, to satisfy their needs.