Facebook Testing "Facebook Credits for Websites" That Helps Third-Party Sites Sell Virtual Goods

Facebook has just announced a closed, limited test in which for the first time it will allow websites to process payments for virtual goods using Facebook Credits. Facebook's virtual currency is currently the mandatory payment method for all Facebook games on the web, a payment option for Facebook apps, and became available as a payment option to mobile app developers last week. The only initial launch partner for "Facebook Credits for Websites" will be online and downloadable games site GameHouse that until now only accepted payments through credit card and PayPal. During the test, Facebook will closely monitor the demand for Credits as a payment method and the user experience of those that pay though its virtual currency. If a high enough percentage of users make purchases through Credits and feedback is positive, Facebook may expend additional resources to let more websites add Credits as a payment option. Eventually, Facebook might open the option to all web developers selling virtual goods or digital media, allowing the social network to earn a 30% cut on transactions across the web. In exchange, sites will be able to provide an easier way to buy their goods and media than punching in credit card or PayPal details. Facebook has provided a signup page for developers that want to try Facebook Credits for Websites if the test is expanded. GameHouse users that sign in to the site with their Facebook login and play Collapse Blast or UNO Boost will only see Credits as a payment option, not credit cards or PayPal. If they choose to buy virtual goods or proprietary in-game currencies, Facebook Credits will be deducted from the same account that Facebook canvas and mobile games pull from. Similar to how it works within Facebook, users without an existing balance of Credits will be able to purchase a bundle within the payment flow. Unlike on Facebook where Credits are the exclusive payment method for games, GameHouse may still offer other payment options. However, Ian Fliflet who handles corporate strategy for GameHouse tells me that those signed in through Facebook won't see the option to pay with a credit card or PayPal account. This could anger some long-time GameHouse users that try signing in through Facebook for the first time only to find their preferred payment options missing in the two test games. That in turn could negatively skew feedback on Credits for Websites. If the test does indicate a demand for Credits as a payment option outside of Facebook.com, its unclear whether Facebook would require developers to use its virtual currency exclusively. It could simply make them an additional payment option, the way Credits currently work for Facebook.com apps as well as mobile apps and games. However, it might extend this test model so that sites that want to use Facebook as an identity and login provider will also need to use its taxed virtual currency. The impact of Facebook Credits for Websites could be significant. It could assist independent game developers and digital media merchants with monetization, as customers might be able to quick make purchases rather than having time to reconsider while enduring the friction of entering their credit card information or logging in to PayPal. Currently, many independent game developers have to distribute through portals like GameHouse that have built a base of users that have already provided their credit card details. Facebook Credits for Websites could give them the opportunity to distribute directly to fans in way that gives them more control over branding. The tax that third-party game portals take on credit card or PayPal transactions may vary widely, so Facebook's 30% cut could be less or more than developers are used to paying. Facebook has much to gain from Credits for Websites, though. The more places they're accepted, the more users that are likely to buy and maintain a balance of Credits, and the more transactions Facebook will get a cut of. A user might buy a bundle of Credits to spend them on a gaming portal or to buy a band's album, but then spend then become a paying customer of a freemium game on Facebook.com. More users maintaining a balance of Credits also makes Facebook a more lucrative platform for developers. Typically only a few percent of gamers ever pay to play, but if they already have a balance they may be more likely to spend. Facebook may need to initially reduce its tax or not demand any exclusivity as a payment method to get websites hooked on Credits. With time, though, Facebook Credits for Websites could become a significant revenue source and powerful way to attract developers.

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Facebook Testing "Facebook Credits for Websites" That Helps Third-Party Sites Sell Virtual Goods

Josh Constine

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