Facebook Credits Will Be Mandatory Payment Platform Starting July 1

Facebook has officially announced today that starting July 1 it will require all social-game developers on Facebook to process payments through Facebook Credits–and consequently share 30 percent of the revenues with it.

While Facebook Credits has been in beta for some time, and an announcement like this was expected, this is the first time Facebook has revealed its whole plan.

The program is a lot like Apple’s iTunes, which keeps 30 percent of the revenues and shares 70 percent with application developers, except that instead of buying an application, users are typically paying for virtual goods from within a social game, such as a new tractor for their farm or a fancy new pair of shoes for their avatar.

Up until now, Facebook Credits had been in beta, and initially developers were upset by Facebook’s announcement that it was creating its own payment platform (and taking a big chunk of revenues with it). But slowly developers have agreed to use its payments platform, and many of them are pleasantly surprised that it requires less work and monetizes better.

Today, it is used in more than 350 applications from 150 developers, including Zynga, Playfish, CrowdStar, Digital Chocolate, PopCap and Arkadium. Already it represents more than 70 percent of virtual-goods transactions volume on Facebook.

Rather than developers having to scrape together a number of payment providers for each country Facebook operates in, Facebook has integrated a number of payment platforms for them, including pay-by-mobile, gift cards, PayPal, Visa and MasterCard.

For consumers, the benefit is that they can enter their payment information once and buy currency across lots of games.

In a recent interview, Katie Mitic, the director of platform and mobile marketing for Facebook, told us that the company has been working hard at introducing Facebook Credits to consumers through free offers and trying to make it as effortless as possible to spend money within games.

While Facebook will require social-game developers to use Facebook Credits starting July 1, they won’t have to use Facebook Credits as their sole in-game currency. That means game developers can continue to brand their own coins and currency within games, such as Zynga’s FarmVille Cash.

However, Facebook will be offering incentives for those who do use Facebook Credits. Developers who choose to will receive early access to product features and premium promotion on Facebook, including featured placement on the Games Dashboard, premium targeting for ads and access to new co-promotion opportunities, Facebook said in an announcement today.

Mitic said it hasn’t been a very difficult sell to get developers on board. For instance, roughly 20 of the top 25 applications are using Facebook Credits, and companies like CrowdStar have made the choice to integrate Credits completely.

After Digital Chocolate integrated Facebook Credits, it said its average revenue per user tripled and billing issues by consumers fell by 60 percent.

So far, Credits can only be used within games, but Mitic said the platform will open up more broadly over time. “Games are the real opportunity right now,” she said.

Over the next five months or so, Facebook will continue to seed Credits among users and ensure that a huge audience is familiar with how to use it before the switch.


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