Facebook to Seize Hold on Payments

  • JJ Hornblass
  • March 8, 2011
  • 2

Mark your calendars: July 1 is the day Facebook becomes a payments company.

July 1 is the day that all in-site apps that “involve third parties” must be “powered by Facebook Credits.” Last week, Facebook clarified what Facebook Credits will offer to developers, and they are valuable features, such as faster pay cycles and a new API, but the end result still appears to me as this: Facebook, and only Facebook, will own payments on Facebook.com. I’ve read that payments on Facebook could be worth $250 million to the company. At 500 million active users, I’d say that’s an underestimate. Reportedly, payments brought in $75 million to Facebook last year.

According to AllFacebook.com, already more than 350 different apps created by 150 different developers have incorporated Facebook Credits — and that includes all but three of the 25 most popular games on the site.

Meanwhile, Facebook is enhancing the functionality of Credits. Last week’s API allows developers to dynamically tweak prices based on a user’s balance in his digital wallet. Previous enhancements allow users to “buy with friends” and make payments using Credits easier.

Some more details, courtesy of ZDnet:

Over the next six weeks, Facebook will be expanding its currency support with the addition of the Taiwan dollar, the Malaysian ringgit, the Thai baht, the New Zealand dollar, and the Singapore dollar, as well as adding support for the following alternative payment options:

* Europe: Ukash, Carte Bleue, cashU, iDEAL, EPS, Mister Cash, Giropay, Direct Debit

* North & South America: Interac, DineroMail, Todito Cash

* Asia: MyCard, Gash, OneCard, 郵便振替/払込, 銀行振込み

All this is coming as Google amps up its virtual payments strategy through its purchase of Jambool. Just this month, Jambool effectively went into hibernation until September 2011, when it will unveil the next iteration of Social Gold, its social media payments platform. In May, the current version of Social Gold will be “discontinued in favor of a new Google in-app payment product.” You can join the beta for the product here.

However, Jambool is very upfront about the fact that the new Google product “will not have the full functionality of Social Gold at launch.” Jambool adds that “we understand that this will not meet the needs of all developers currently using Social Gold.”

What does this all mean? Facebook is on a single-minded march to own payments on its site, and I suspect that Facebook Credits will be extended beyond the four-walls of Facebook.com. Meanwhile, Google will be offering sub-par payments options at least until September, effectively yielding marketshare to PayPal and others. I wonder whether Social Gold will ever find much traction. As for Facebook Credits, the waterfall of revenue is only just beginning.

 

For the full specs on Facebook Credits, visit here.

 

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JJ started the first iteration of Bank Innovation back in 2007, and has been working on it ever since. He also serves as President & Chief Executive Officer of Royal Media, Bank Innovation’s parent. He founded Royal in 1995 and oversees all aspects of the New York-based diversified media company. Prior to forming Royal, JJ was on the editorial staff of American Banker, the daily newspaper, and worked as an editor of a business magazine in Hong Kong. As a reporter and editor, he has won journalism awards from the National Press Foundation, Newsletter & Electronic Publishers Foundation, and the Reader’s Digest Foundation. He has a BS in Economics from Yeshiva University and a Master’s from the Columbia University Graduate School of Journalism. He was also a Fellow at the University of Wisconsin-Madison Graduate School of Banking. He lives in New York City with his wife, two daughters, and son. He counts among his accomplishments one New York City Marathon, two New York City Triathlons and the 2010 Father’s Day 5K, the first race he ever ran with his daughters. He can be reached at hornblass@gmail.com or 212-564-8972.

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2 thoughts on “Facebook to Seize Hold on Payments

  1. 500 million Facebook users averaging 50 cents per year in Facebook virtual purchases would generate $250 million. Yeah, sounds believable to me. Have you ever been to Farmville? I bet those folks spend a lot more than a half dollar a year outfitting their own places!

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