Board game funny money.

Funny money of the past.

Micropayments have been the holy grail of the internet for years. Finally, companies like Apple and Amazon seem to be profiting where many others have tried and failed. Apparently, Facebook thinks that they stand to make a profit through micropayments as well. According to Facebook’s developer blog, Facebook is now entering the beta phase of their Facebook Credits program. This program allows users to purchase virtual currency from Facebook that would allow them to purchase virtual goods in participating Facebook applications, such as Farmville.

Facebook touts this as a great opportunity for developers. Since Facebook is more trusted by many than the myriad of Facebook app developers, the ability of users to buy credits from Facebook gives them more confidence that their financial information is safe. It also speeds up the purchasing process. Once Facebook has the credit card or Paypal information, it’s easy to add more credits. The user doesn’t have to deal with giving their financial information to all of the different companies that they might want to buy virtual goods from.

While it is reasonable to say that making the purchasing process easier should increase the amount of money that consumers spend playing Facebook apps, I think it’s too early to say how much it will increase the revenue collected by individual applications. Like with Apple’s program, Facebook takes a hefty 30% of the revenue. That’s an awful lot for what is, in this case, nothing more than a payment processing role. Assuming that a virtual good is about a dollar, that is about as much as if the company was paying the credit card company to ring up each $1 purchase separately. If Facebook was selling credits in bundles of $5 or $10 on the other hand, that comparison is much less favorable. A credit card company would charge around 7.5% and 4.8% respectively in those scenarios.

So, this definitely looks like a great additional revenue stream for Facebook, but whether or not being a part of this system will work out well for developers will have to be seen. My gut tells me that only a few developers will make out well under this system. Plus consumers will waste money buying virtual products that could have been spent on more tangible products. The only guaranteed winner I see is Facebook.