Facebook Updates Payment Terms to Control Credits Supply, Ease International Processing

Facebook has been tweaking its Credits and payments terms for users, developers, and advertisers, giving them more clarity and itself more flexibility as the program expands. Most recently, it gave the user Payment Terms a small update, and here’s a look at the two main ones below.

Facebook has been busy selling Credits, its virtual currency for games and other apps, to users through a variety of partners including gaming companies and payment service providers. It has been giving Credits away for free through some of these third parties, in hopes of enticing more users to try out the free Credits then buy the real ones.

But it needs to control the supply, to get users paying and developers making money — if too many of the Credits going through the system are free, developers don’t make any money. Facebook already doesn’t redeem free Credits for developers if a user redeems them in an app, according line 3.11 of its separate developer Credits Terms (although it sometimes lets developers issue their own free Credits as promotions).

So line 3.9 of the user terms now says that “If you receive free or promotional Credits, we may expire them at any time.”

That should help allay developer concerns about revenue-free Credits pouring into their apps. But because there’s no way for users to tell free Credits from paid Credits, and because Facebook might remove the free ones at any time means, users should consider spending down their Credits balances after taking a promotion in order to make sure they redeem them all successfully.

The other term change is more on the back-end, in that Facebook has divided Credits terms to apply to either its main corporate entity, for the US and Canada, or to its international subsidiary in Ireland, Facebook Ireland Limited. The specific user Payment Terms line, 8.3:

If you are a resident of or have your principle place of business in the US or Canada, these Payments Terms are between you and Facebook, Inc. Otherwise, these Payments Terms are between you and Facebook Ireland Limited. References to “us,” “we,” and “our” mean either Facebook, Inc. or Facebook Ireland Limited, as appropriate.

Ireland offers a variety of tax breaks and other benefits to international companies, which likely prompted Facebook to open an office there in the first place. It has expanded the office to handle much of its international business. It is now routing many payments through the country, in part because local and regional processing can reduce the likelihood of cards being declined.

One final, somewhat related point: Developers who are also paying advertisers on Facebook should note that the Irish office may be handling payments from them. Here’s more about that, as shared by Facebook sometime around when it upgraded its ad tool to include broad targeting:

Starting September 2010, Facebook’s European headquarters in Ireland will become the primary seller of Facebook ads for some advertisers. As part of this, Facebook needs to ensure your tax information is correct in order to properly determine the application of Irish Value Added Tax (“VAT”).
Please take a moment to update your VAT information.

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