Facebook begins testing virtual payments system

Social networking site Facebook has begun testing its much-anticipated virtual currency payments system with third party application GroupCard.

Users who want to buy a GroupCard e-card through the company's app are now offered the option of clicking on a "Pay with Facebook" button.

They then pay with their credits, worth 10 cents each. The currency can be bought - with a credit card - from the Facebook gift shop.

The testing comes after Facebook updated its payments terms and conditions on Wednesday to pave the way for the platform.

Facebook will take a cut of every transaction, potentially providing it with a significant revenue stream. The site currently has around 200 million users and more than 52,000 applications in its directory.

Letting customers make purchases with credits enables merchants to sell content for small amounts without being hit by prohibitive credit card transaction fees.

The currency could also break out of Facebook, being used for micropayments on a range of Web sites such as magazines and newspapers.

Earlier this month it emerged that the Wall Street Journal is planning to introduce micropayments for access to articles on its Web site later this year.

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Keywords

Cards Blockchain Dis-intermediation Social media

Comments: (1)

A Finextra member 12 June, 2009, 10:13

1 like

In order for this payment system to be truly effective, Facebook must ensure that it is suitably equipped to deal with outbound as well as inbound payments. Much like the system utilised by Second Life, Facebook will need to guarantee that developers are able to access their share of the application revenues and similarly users are able to cash out their credits. Alongside this, the payments system will need to be highly sophisticated if it is to support Facebook's truly global community. While the Internet - which allowed Facebook to grow so rapidly - knows no borders, financial systems are much more border-bound. Yet, social networking sites, such as Facebook, which recognise and address the issues surrounding both inbound and outbound payments will put themselves in a strong position to finally make a profit from their endeavors by leveraging the collective power of their application developers and interactive users.