Facebook draws the curtain on Credits, opts for local currency instead

Social networking giant Facebook has finally pulled the curtains on its virtual currency Credits, according to reports. The social network will now base its payment mechanism on local currency payments instead. The virtual currency was first launched in June 2011 as a way to make online payments simpler. Instead, the system began causing a lot of issues for international payments due to the fluctuating exchange rates. The new system based on local currency should help both developers and the social network make more money, make the payment process a lot easier and cement Facebook’s status as an international app platform.

The social network had initially aimed at taking a 30 percent cut from purchases made in games played on its website, similar to how Apple and Google make money from their iOS and Android in-app sales. Instead of using local currency, though, Facebook introduced the intermediary virtual currency as its standardised payments system. Each Credit was valued at $0.10 and could be spent on buying virtual goods or game-specific currency. Credits worked well while Facebook’s user base was largely based in the United States. But the massive expansion of the social network internationally meant that there were some serious problems about uniformly pricing goods within games.

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The increasing number of problems finally caused Facebook to announce in March that it was planning to forgo Credits in favour of local currency payments. The new system will now allow developers to customise their e-good prices based on different regions being catered to. All users now need to do is click “Buy” to get redirected to a payment system using either a credit card, PayPal, mobile payment system like Zong or a gift card. And those are not the only advantages that in-app local currency transactions allow.

Facebook has opted for local currency in-app payments over Credits

First off, users can directly pick up the goods they want instead of wasting time buying Credits. Users will also avoid having to calculate how much in-game goods cost. While Credits obscured the valuation, users can now see price in the local currency they have to shell out. Facebook still plans to hold on to its 30 percent cut from each purchase, which means that the more people buy in third-party games, the more the platform earns.

But local currency payments could also pave the way for something even big: being able to buy real things off the Internet directly through Facebook. Last month, the social network began experimenting with e-commerce app JackThreads to give users the option of paying with Facebook.

This basically means that you can authenticate a transaction using your Facebook email address and password. The social network will then auto-fill your credit card and billing information to make the purchase process easier. While the payment will still be processed through PayPal or any other third-party e-commerce app, pay with Facebook should help speed up the process. In return, the company will be able to monitor your purchase to see if it was caused due to a paid ad displayed on the network. This data would be concrete evidence on returns, helping Facebook rope in bigger campaigns. While Credits made sense for gaming, real commerce needs a direct system like local currency. And it looks like Facebook is keen on making that leap in the near future.