PayPal's New Virtual Goods Payment System: User Experience and Implementation

PayPal yesterday launched a new virtual goods payment system with support for purchasing social game items -- here's a closer look at the implementation and user experience. The most significant new component, as we covered, is that upon choosing to pay for a virtual good through PayPal, users see a pop-up mini-browser in which they can carry out the transaction. This removes much of the friction from the previous payment flow, which had redirected users to PayPal.com, causing users to lose their place in their game or site, and possibly not make a payment as a result. Facebook is going to be one of the partners. Currently, users who try paying for Credits using PayPal for the first time have to log in and confirm on the PayPal site, so expect that step to be removed. Additional features of the new virtual goods payment system include automatic selection of the appropriate merchant account to minimize their fees, subscription and recurring payment support, ability to donate a portion of sales to charity, shopping carts which can contain items from different sellers, and item-by-item breakdowns of purchases for users. PayPal reports that currently more than 50% of direct payments within social games go through PayPal. Khurram Khan, Senior Product Manager for PayPal, explained that being redirected away from a social game to make a payment is especially frustrating to gamers because "you're given an opportunity to purchase a good, but by the time you get back from the purchase you're no longer in the place where you need the good." But there there are some caveats to the "50%" stat, as our readers know well. Up until this year, PayPal was a main way that users could pay directly for virtual currencies in games. That is changing. Facebook is making Credits the exclusive virtual currency payment currency, and while PayPal is a main option for buying Credits, it will no longer be appearing separately within applications as it has up until now. PayPal may continue to account for half of all direct payments in social games, but for the bulk of the industry on Facebook, that will be happening through Credits from now on. Product Details The new PayPal virtual good payment APIs will be available once PayPal concludes a private beta designed to ensure the system improves conversion rates. When ready, merchants will be able to go through a simple registration flow, and embed the javascript behind the "Pay with PayPal" buttons on their game or site. The system is backward compatible with different types of PayPal accounts, though some merchants will have to upgrade to a business account. Once embedded, the transaction flow is as follows: Buyers initiates a PayPal purchase on a merchant's site or app Merchant makes an API request Merchant receives back a pay key / token Merchant launches the mini-browser, and does not redirect the user to PayPal.com Buyer authorizes purchase Mini-browser closes with the buyer still on the same site PayPal sends email notifications to both the buyer and the merchant The virtual good payment system stands to significantly improve the purchase experience for users, leading to higher conversion rates for merchants. The system will allow user to make direct payments within games or quickly purchase Facebook Credits; purchase single pieces of content, subscriptions, or pay-as-you-go with publishers, media, and software distributors; or pay merchants on shopping sites. Inside Facebook Gold's survey of perceptions of different social game payment methods for social games showed that while nearly 70% new that PayPal was an option, only about 22% preferred to use PayPal to buy virtual currency. By creating an 2-click purchase flow which doesn't redirect users and is easy to implement, PayPal could pull more transactions away from credit card companies.

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PayPal's New Virtual Goods Payment System: User Experience and Implementation

Josh Constine

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Josh Constine