Facebook axes Credits, adds in-app subscriptions

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Facebook is revamping its digital payments platform, introducing in-app subscription pricing and abandoning its Credits virtual currency model to support pricing based on developers' local currencies.

Beginning in July, all Facebook.com and mobile Web apps will enable in-app subscription pricing options allowing developers and publishers to offer updated content or premium services for a recurring monthly fee. Partners Zynga (NASDAQ:ZNGA) and Kixeye are currently trialing the service. Facebook will offer consumers multiple payment options including carrier billing as well as MasterCard, Visa, American Express and PayPal.

Facebook - in app subscriptions

Kixeye's Backyard Monsters will start testing an offer of exclusive items for $9.95 per month.

Source: Facebook

The move heralds a shift away from the Credits model, marketed by Facebook as a "safe and secure way" to make digital payments. Credits were available for purchase using credit cards or PayPal; Facebook also offered prepaid cards sold at retailers. Facebook encouraged users to purchase credits in bulk, pricing 50 credits at $5 but offering 2,360 credits for $200.

"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," explains Facebook Product Management Director Prashant Fuloria. "As a result, we are updating our payments product to support pricing in local currency (ex: U.S. dollar, British pound and Japanese yen) instead of Credits. By supporting pricing in local currency, we hope to simplify the purchase experience, give [developers] more flexibility, and make it easier to reach a global audience of Facebook users who want a way to pay for apps and games in their local currency. With local pricing, [developers] will be able to set more granular and consistent prices for non-U.S. users and price the same item differently on a market-by-market basis."

Fuloria said that most Facebook users already see items priced in their local currency within the payments flow. "Additionally, we'll convert any Credits balances into the equivalent amount of value in users' local currency, which they can spend on in-app items in the same way they do today," he adds. "People can still redeem gift cards and store unused balances in their account. Subscriptions already uses local currency pricing, and we will release local currency support for in-app payments in the next few months. Any apps or games that sell virtual items will be required to use local currency by the end of the year."

Facebook claims a 30 percent share of all transactions across its platform. Earlier this month, the social networking giant unveiled a more streamlined operator billing process for mobile Web applications, trimming the payments flow from as many as seven steps down to two. Consumers who wish to purchase virtual goods or digital content within mobile Web apps incorporating the Facebook Payments API now open the payment dialog and confirm the transaction by clicking the Buy button. The transaction is automatically charged to their monthly wireless provider bill. The process eliminates common steps like SMS verification and requires no typing.

Facebook boasts more than 901 million users worldwide, up 33 percent from 680 million a year ago, with 488 million users accessing the site via mobile device each month. Last month, Facebook raised $16 billion in the second largest stock market debut in U.S. history, valuing the social network at $104.2 billion. Growing investor concern over Facebook's ability to successfully monetize its mobile audience, however, has since wiped billions off its value.

For more:
- read this Facebook Developer Blog entry

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