Is Facebook secretly planning an internet-wide payment platform?

FacebookIs Facebook taking the first steps towards making itself an internet-wide payment platform?

You may know that the company is working on something it calls Facebook Credits (it’s in beta). You can buy Facebook Credits with a credit card or Paypal, and then use these credits as a currency when buying virtual items from applications on the Facebook platform (Facebook apps). A number of apps already use it.

This move will let Facebook get a cut of the action of the in-app purchases of various Facebook apps such as Mafia Wars and Farmville (Facebook will take a massive 30% chunk). Great for them, and if the increased convenience and ease of use is enough to make users spend 30% more, it should be a good thing for developers as well.

Facebook Credits can only be used with Facebook applications, and this is all Facebook has been talking about, but you can’t help but think that this might be the first step in an even more ambitious direction.

Credits + Facebook Connect = Payment platform

Look at Facebook’s tendency over the last few years. It’s gone from being a small, walled garden to being increasingly focused on pushing its influence out into the rest of the web. Facebook Connect is a prime example of this, where you can use your Facebook login on third-party sites, which in turn get access to your Facebook information.

And in many ways it’s Facebook Connect that makes the potential of Facebook Credits so intriguing.

Couple Connect with Credits and you get a new payment option that could, if Facebook allows it, be used as a universal payment option on the internet. Facebook would act as the go-between between Facebook users and online stores and services.

Of course, Facebook wouldn’t be able to take a 30% cut of purchases outside of the Facebook platform, but they could take a small cut. Businesses have been built on less (Paypal, anyone?), and if you consider the huge user base that Facebook already has this could mean a big influx of money for the company.

Another bonus for Facebook: information

There is one more thing to consider if Facebook ends up following this path. One of the most valuable commodities these days is information (it’s what Google is made of), and being a proxy for purchases would give Facebook very valuable information.

Facebook already knows a lot about you, but being able to know what kind of purchases you make could potentially help Facebook serve you ads in a more efficient manner. Are you buying flowers online? Well, let’s serve you ads from florists! More effective ad targeting would ultimately lead to even more money rolling into Facebook’s coffers.

Of course, considering the massive backlash after Beacon a while back, Facebook would have to tread very carefully here and carefully consider the privacy implications.

What do you think?

Are we headed towards a new internet currency, one resting on the shoulders of the Facebook platform?

A simple credit system like this might not be ideal for large purchases, but great for micro transactions and smaller payments. It could be very convenient. For example, you could use Facebook Credits to pay for online content, when you shop books at, or order a pizza online.

So here’s a question: Would you use it?


  1. Anything that puts pressure on PayPal is good.

    I was really hoping Google and/or Amazon checkout would make PayPal be less evil and more competitive but they’ve changed nothing. Facebook just might be large enough to make some kind of dent. Elon Musk made millions off online payments, why aren’t more companies offering it?

    You’d also think more services would tinker with micropayments by now but they keep going under (like TipJoy).

  2. I don’t think Facebook are going to be doing a general purpose payment system themselves. I don’t think it makes a lot of sense for them. I also have some insider information saying they wont. That said they will likely expand Facebook Credits.

    @_ck_ the reason PayPal is perceived as evil is due to a combination of regulators and primarily banking connections. As long as they are linked into the traditional banking system they need to make these perceived evil decisions to protect themselves.

    I have no connection with PayPal, but I have worked in the payment field for a long time. Check my blog for more articles on this annoying issue.

  3. I’ve been thinking this same thing for a while. They have the massive user base that is necessary for a micropayments system to take off. And taking that one step further, if they can extend this payment system to smartphones, it has potential to replace credit cards as the way that people pay for goods and services in the future. I really do think this will be Facebook’s “Adsense Moment”, one that will show the financial markets just how profitable they can be, which will eventually lead to their IPO.

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