Sunday, February 16, 2020

Facebook drops Credits; transitions to local currency payments

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Facebook launched its virtual currency Credits in June 2011 to simplify payments, earn a 30% cut on purchases, and create a level playing field for game developers.

Yet in reality, they caused headaches for app creators and hesitation from the buying public.

And so, after years of championing by Facebook, the site called an end to the currency on the 11th of September, 2013.

Credits recap

On paper, Credits looked good. In order for Facebook to earn a cut on purchases (much like Google earns on Andiod app sales) a standardised system was needed.

But rather than have people buy things in their local currency, Facebook launched Credits — an intermediary online currency priced at $0.10 each – which could be used to purchase virtual goods or game-specific currency.

Whilst the added hoopla may have annoyed some, there were also some major benefits. Firstly, users did not have to transact with game companies directly, and could rely on Facebook’s security as an interim.

This was especially good news for unknown, smaller developers who lacked standing, and therefore buyer confidence.

Credits also leveled the playing field between developers – as they were more liquid and could be used in any game – giving small developers a shoe in as money wouldn’t be trapped in bigger games.

Growth problems

This functionality took a nosedive however when Facebook grew outside of America.

Confusion was caused in overseas markets due to exchange rates changes. Often overseas customers assumed that a change in credit prices meant developers were hiking prices – which understandably led to purchase hesitation.

Ultimately, these international payment problems dwarfed the pros of Credits.

The introduction of local currency payments allows developers to vary the price of their in-game goods based on individual countries – and see them remain that way.

And since Facebook still earns a 30% cut on in-game purchases, the more people buy in third-party games, the more it earns.

In 2013, Facebook’s payment revenue hit US$ 214 million.

Purchasing power

The development has the opportunity to become a game-changer, as with the introduction of real currency purchasing comes the ability to buy items through Facebook.

Last month the test eCommerce app JackThreads allowed the ability to “pay with Facebook.”

There is a chance that Facebook will now use its brand standing to ease online payments for millions around the world – which could signal a new dawn for online purchasing.

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