Two companies that support online payments are getting involved with Facebook Inc. to streamline micropayments for virtual goods users purchase on the popular social networking Web site.
PayPal Inc. last week announced it is has become a payment option for Facebook Credits, which Facebook is testing in a small number of games and applications available on its Web site. Consumers use Facebook Credits to pay for virtual items in online games. And United Kingdom-based ClickandBuy International Ltd. has developed a Facebook application that enables users to conduct person-to-person funds transfers and to purchase virtual goods, content and services offered on the site.
The announcements illustrate how virtual and real-world currencies are coming together to shape micropayments on social networking Web sites, according to Beth Robertson, director of payment research at consulting firm Javelin Strategy & Research.
Facebook Credits uses a PayPal program that enables software developers to build new products based on the payment company’s platform. For example, TwitPay enables users to send and receive micropayments through microblogging service Twitter Inc. PayPal X, the name of the program, powers TwitPay.
“One of the key points of our payments platform is the ability for it to be integrated into what other people are developing,” says PayPal spokesperson Anuj Nayar.
The Facebook-PayPal partnership should end any speculation Facebook Credits would evolve into a direct competitor of the established payments company. PayPal in no way viewed itself as a competitive threat to Facebook and vice versa, according to Nayar.
Facebook wanted another way for users to pay for credits, but it did not want to develop a payment system from scratch, Nayar says. “That is where we come in,” he adds.
Facebook users also may purchase credits with a credit or debit card or charge the purchase to their mobile-phone bill.
PayPal is no stranger to Facebook micropayments. Online game developer Zynga Game Network Inc. has two Facebook games, Farmville and Mafia, that accept PayPal for payment for virtual goods used in those games. The use of Facebook Credits is not regulated limited to just one game.
The agreement also enables companies that advertise on Facebook to pay for ads using PayPal. “[Accepting PayPal] was something advertisers told Facebook they wanted,” Nayar says.
Facebook did not respond to a request for comment.
Across the pond, ClickandBuy plans by the end of the month to roll out its Facebook application. And, like PayPal, the company also has experience with micropayments, Charles Frankl, ClickandBuy CEO, tells PaymentsSource. ClickandBuy users already may pay for songs at Apple Inc.’s iTunes store and for online games from video-game company Electronic Arts Inc.
ClickandBuy decided to develop a Facebook application because “Facebook in itself has become an important platform on the Internet, and it will become a lot more important to electronic commerce,” Frankl says.
Users may fund a ClickandBuy account with a credit or debit card or through a direct debit from a checking account using the bank-routing and account information from a personal check. ClickandBuy did not reveal the application’s fee structure, but Frankl says fees would be low, and the company most likely would limit transactions to US$75 (55 euros or 48 British pounds).
Users should find the application to be “pretty straightforward” once they download it to their personal Facebook page, according to Frankl. “You need to make something like this intuitive and explain what the product really does for you,” he says.
Facebook users can find the application using a keyword search located on their home page. ClickandBuy also will promote the service on the Web site. Frankl hopes user word-of-mouth campaigns will spur the application’s use.
ClickandBuy also plans to align itself with online game companies to accept the application as payment. “We are aligning ourselves with companies that are interested in social e-commerce,” Frankl says.
Facebook becoming part of a payment scheme was bound to happen, Javelin’s Robertson says. But the social-networking site and the companies involved will need to make a distinction between virtual and real-world currency and virtual and “hard goods,” she adds.
“There could be a situation where virtual currency can be exchanged for an actual retail item, and that distinctions needs to be highlighted,” Robertson says.
