Facebook is to phase out its Credits payments system in favour of users using real money in local currency to buy goods and services within the site.
The social network, which generates an estimated 15% of its total revenue from game purchases, said it was making the change to “simplify the purchase experience”.
The move may help boost the firm’s profits. It takes a 30% cut of all transactions made on its network.
A post on its developer blog also announced that it would allow app creators to charge subscriptions from July. Game publishers Zynga and Kixeye had already been allowed to test out the feature.
The Facebook Credits system started in 2009 for people to buy things within the social network using a shared currency across all territories.
The credit system was originally design to make it simple for developers to integrate a single payment scheme for their apps and services.
Members were encouraged to buy large sums at one time by the promise of discounts – for example 50 credits cost $5 (£3.20) but 2,360 credits cost $200, representing what the firm termed an “18% bonus”.
However, third-party developers tended to subsequently convert Credits into their own in-game currencies, making it harder for users to keep track of what they were spending.
“Since we introduced Credits in 2009, most games on Facebook have implemented their own virtual currencies, reducing the need for a platform-wide virtual currency,” the firm’s product management director Prashant Fuloria told developers.
Facebook takes 30 per cent of the Facebook Credit sales value as a royalty, which brought in 15 per cent of its revenue last year.
Facebook said that most games within Facebook now have their own virtual currencies, so the platform-wide virtual currency isn’t needed any more.
Fuloria added: “By supporting pricing in local currency, we hope to simplify the purchase experience, give you more flexibility, and make it easier to reach a global audience of Facebook users who want a way to pay for your apps and games in their local currency. With local pricing, you will be able to set more granular and consistent prices for non-US users and price the same item differently on a market-by-market basis.”
Facebook Credit balances will be converted to users’ local currency which can be spent in the same way as credits are today. Unused balances and gift cards can still be redeemed and put into the user’s account. The changes will begin in July.
The new system will allow Facebook users to input their credit card details once to store on Facebook, just like on Amazon. From then on Facebook users can order very simply, quickly and easily with a one click system. We will have to wait to see the range of products and services this will encourage to be sold within Facebook.
Investors in Facebook stock are most probably relieved at more plans to monetize the huge social network’s clientele. Yesterday the stock was recovering at around the $32 level, well off the $25 lows of a few weeks ago.
Read the official company blog here.