Facebook Turns On Another Revenue Stream – Now You Can “Pay With Facebook”
Facebook has just launched the first live integration of its payment service for applications, a first step toward what could become a major new source of revenue for the company.
The payment system, called “Pay with Facebook” to consumers, is now live in fbFund-winning application GroupCard. Inside the app, users are able to purchase premium items for anywhere from $3 to $25, which can then paid for with any major credit card or Facebook credits. Facebook credits are the first payment option listed in the user interface.
When users click the “Pay with Facebook” button, a new popup appears showing the total price in Facebook credits and offering Facebook credit purchase options. Facebook bills the credits to a credit card you have on file, or you can enter a new credit card in the popup window. Full screenshots are below.
Now that Facebook is starting to roll out its virtual currency payment service to platform applications, demand for Facebook credits should increase dramatically – which would mean substantial revenue increases for Facebook. With the Facebook Platform economy estimated to be potentially as high as $500 million in total transaction values this year, Facebook could potentially add several million dollars to the bottom line simply by capturing a small piece of the overall market.
How much revenue might Facebook’s payment service generate? Back in December 2008, we estimated the following:
Let’s take a look at the current state of the transaction economy on the Facebook Platform. I’m not going to speculate on numbers here, but for the sake of argument, let’s consider the three widely varying cases that 2008 Platform transactions totaled a) $50 million, b) $150 million, and c) $250 million. Without going into too much detail, let’s quickly approximate that Facebook could net 5% of sales through an integrated payments solution.
At the end of the day, those fees might have added around a) $2.5 million, b) $7.5 million, or c) $12.5 million to Facebook’s top line, not accounting for the lift in transactions that would likely have arisen from a more frictionless payment option. Based on popular estimates of between $250-$300 million in Facebook’s 2008 revenues, a platform payment system could have reasonably boosted total revenues by 3-5+% this year.
For the sake of argument, let’s say the Platform does $500 million in total transactions this year (that’s on the high end of estimates in the $300-$500 million range we’ve heard from leaders at companies in the space). If Facebook processes 5%, 15%, or 25% of overall transactions this year, that could mean $2.5 million, $7.5 million, or $12.5 million in incremental 2009 revenues respectively (assuming Facebook charges a 10% transaction fee – we don’t know what the actual fee is or will be yet). In other words, still only a small percentage of Facebook’s overall bottom line.
May 30th, 2009 at 1:01 am
People trust the Facebook brand so I feel this will become popular and quickly!
May 30th, 2009 at 6:01 am
[...] Facebook is starting to roll out its virtual currency payment service to platform applications, demand for Facebook [...]
May 30th, 2009 at 7:08 am
This will make it easy for some to make payments through Facbook!
May 30th, 2009 at 9:12 am
Your math would suggest that Facebook’s best effort should be making this payment system as easy to implement as possible. I know that every web developer dreads integrating payment systems, and something that you could just drop right into a Facebook application could easily grow to process 25% or more of Facebook transactions, which is a must if this is going to become a solid revenue stream.
May 30th, 2009 at 12:36 pm
[...] Virtuelle Währungen sind eines der Themen, die bei meinem Valley-Trip vor drei Wochen stark im Gespräch waren. Seitdem geht es Schlag auf Schlag: Facebook ermöglicht es seinen Nutzern Credits an andere Nutzer zu transferieren, ändert das Tauschverhältnis $ zu Credits und öffnet das Facebook Payment System auch für Applications. [...]
May 30th, 2009 at 1:07 pm
[...] unter anderem Inside Facebook berichtet, ist das Bezahlen in der Applikation GroupCard bei Facebook jetzt auch mit hauseigenen [...]
May 30th, 2009 at 2:03 pm
The 500MM estimates that are floating around are for social media third party apps on aggregate. So this includes Myspace, Facebook, hi5, etc etc.
FB will be about 200MM imho. This is a total including all micro transactions via CC, Paypal, Mobile, Direct Deposit, etc. It also includes revenues via Offer Walls from Super Rewards and others. It also includes banner ads and CPI revenues.
Facebook will be VERY hard pressed to capture even 10% of that at the top line. If they then take a 10% margin that puts about a million in gross profits on their books. I bet they spend 2 million creating and managing it.
This is NOT the miracle tool that will turn Facebook into the next multi billion dollar IPO.
Unless they pass a new rule that says ALL apps must run ALL payment revenue through facebook (as Apple does in the app store). In that case they would capture a good majority of the revenue. Also they could get away with charging 30% margins (as Apple does in the app store).
This would also cause an angry mob of torch wielding developers at Zuckerburg’s door, myself at the front chanting for a riot.
May 30th, 2009 at 4:35 pm
[...] ¿qué impacto puede tener la noticia publicada hoy en nuestra versión en Inglés sobre la incorporación de Facebook como medio de pago en la aplicación [...]
May 31st, 2009 at 6:03 am
[...] Facebook Turns On Another Revenue Stream – Now You Can “Pay With Facebook” "Facebook has just launched the first live integration of its payment service for applications, a first step toward what could become a major new source of revenue for the company." (tags: web facebook socialmedia socialnetworks businessmodel ecommerce micropayment) « links for 2009-05-30 [...]
May 31st, 2009 at 7:30 am
LOoking forward to tryint it !
June 1st, 2009 at 12:54 am
Pay with facebook is a good way of paymnent. It good for both facebook and its users.
June 1st, 2009 at 4:18 am
I think this is a very good idea … Facebook is very popular and I think people trust the name, so this should work
June 1st, 2009 at 7:45 am
[...] first discussed its Platform payments system, the first live integration of Facebook’s “Pay with Facebook” payment service is now live as of this weekend. Now, users in 3 applications – GroupCard, [...]
June 1st, 2009 at 11:19 am
With all the ‘viruses’, scams, easy access, phishing successes – not to mention technical slowdowns where FB is timing out, I think that Facebooks has other technical and security issues that it needs to deal with first.
I trust PayPal because handling money is all it does. Facebook does too many things and there are too many holes for opportunist to take advantage of less sophisticated users.
I forsee a security nightmare here.
June 1st, 2009 at 11:55 am
[...] that there will soon be a payment system on Facebook – it’s social, and not yet public. When you buy something on FB, your friends will be [...]
June 2nd, 2009 at 1:01 am
[...] im Testeinsatz. Wer z.B. über die Anwendung GroupCard digitale Grußkarten bestellt, kann jetzt mit den hauseigenen “Facebook Credits bezahlen. 10 Credits sind ein Dollar, aufgeladen wird per Kreditkarte. Mit Facebook [...]
June 3rd, 2009 at 4:23 am
It is grate feature, people trust facebook and will use this payment system.
June 4th, 2009 at 4:27 pm
This great initiative from Facebook and recently we have started using facebook stream in our website http://www.shopnics.com. With this feature now you can bring your friends and shop together and also exchange and get opinion quickly about any purchase in the website.
June 5th, 2009 at 9:34 am
[...] GroupCard is a 2008 fbFund winner that is also taking part in early tests of Facebook’s payment system. [...]
June 11th, 2009 at 9:31 am
[...] Facebook recently started testings its new Facebook Credits payment system with three applications, there’s been a lot of interest from developers in trying out the new [...]
June 11th, 2009 at 11:35 pm
[...] 12, 2009 Facebook has recently started to work with a very limited circle of app developers in the alpha program for its credit payment system. For those interested, you can now sign-up for [...]
June 15th, 2009 at 4:53 pm
[...] Would you like to share any thoughts or impressions on Facebook’s early payment system tests? [...]
June 17th, 2009 at 9:17 am
[...] that Facebook has launched its alpha “Pay with Facebook” test, what’s your [...]
August 19th, 2009 at 7:21 pm
[...] from third party developers. The move will expand Facebook’s merchant platform beyond the “Pay with Facebook” tests that are running inside a few applications and, for the first time, integrate a variety of [...]
August 20th, 2009 at 4:03 pm
[...] Pay with Facebook feature was first spotted by InsideFacebook within the GroupCard application. Inside the GroupCard application. The virtual goods being [...]
August 21st, 2009 at 8:15 am
[...] Pay with Facebook feature was first spotted by InsideFacebook within the GroupCard application. Inside the GroupCard application. The virtual goods being [...]
August 24th, 2009 at 2:55 pm
[...] of the commerce side of its business, but it’s clear that between recent test launches of its payment service for developers, Facebook Credits virtual currency initiatives, and last week’s gift shop merchant program, [...]
August 25th, 2009 at 10:54 am
[...] items from third party developers. The move will expand Facebook’s merchant platform beyond the “Pay with Facebook” tests that are running inside a few applications and, for the first time, integrate a variety of [...]
August 25th, 2009 at 3:09 pm
[...] items from third party developers. The move will expand Facebook’s merchant platform beyond the “Pay with Facebook” tests that are running inside a few applications and, for the first time, integrate a variety of [...]
August 25th, 2009 at 5:06 pm
[...] items from third party developers. The move will expand Facebook’s merchant platform beyond the “Pay with Facebook” tests that are running inside a few applications and, for the first time, integrate a variety of [...]
November 5th, 2009 at 5:26 pm
Help me understand why a user would rather “Pay with Facebook” than directly use their credit card? What advantage does it have for the consumer? Is the item cheaper if they use Facebook? Or does it just allow them to collect a bunch of Facebook Credits to use more easily throughout the site?
Personally, I would feel more secure using a PayPal option. But I suppose if Facebook were to allow that, it would not see the revenue from the transaction (or, at least, not as much).
January 22nd, 2010 at 7:18 am
[...] Facebook tjener faktisk penge og det har de gjort i et stykke tid, og de forventer at det bliver endnu bedre i 2010. I 2009 har de tjent deres penge på annoncer, som vi kender dem, selfserving ads, aftalen med Microsoft og sidst men ikke mindst “virtual gifts” – bemærk, at det fra 2009 blev muligt at bruge købe viruelle effekter via Facebook applicationer. [...]
February 5th, 2010 at 12:58 am
[...] Insidefacebook.com & socialnetworkingwatch.com Skriv en [...]
February 18th, 2010 at 10:29 am
[...] Facebook has been testing the ability for users to purchase virtual Facebook credits for over a year, allowing users to send virtual goods to each other, as well as purchase additional features in [...]
February 18th, 2010 at 4:43 pm
[...] Facebook has been testing the ability for users to purchase virtual Facebook credits for over a year, allowing users to send virtual goods to each other, as well as purchase additional features in [...]
February 19th, 2010 at 10:43 pm
[...] Facebook has been testing the ability for users to purchase virtual Facebook credits for over a year, allowing users to send virtual goods to each other, as well as purchase additional features in [...]
February 20th, 2010 at 8:49 am
[...] Facebook has been testing the ability for users to purchase virtual Facebook credits for over a year, allowing users to send virtual goods to each other, as well as purchase additional features in [...]
June 7th, 2010 at 1:07 pm
I think this is a platform to charge FB users along with Internet Pay.
If FaceBook begins charging for users to access their account, they will definitely see a significant decline in participants as they will search for other non-charging forums, escpecially MySpace, who really seems to be hurting drastically.
Do charge for FaceBook and keep your “Friends.”
June 7th, 2010 at 1:08 pm
I think this is a platform to charge FB users along with Internet Pay.
If FaceBook begins charging for users to access their account, they will definitely see a significant decline in participants as they will search for other non-charging forums, escpecially MySpace, who really seems to be hurting drastically.
Do NOT charge for FaceBook and keep your “Friends.”
July 9th, 2010 at 3:12 am
I read your post. Its interesting and very nice to read. thanks.
October 27th, 2010 at 12:46 pm
I just purshed a PREPAID 25.00 dollar mastercard for frontierville to buy horseshoes ..u have rejected my card..i call the company like u said the card is good..Why will u not evcept it -,i have used several of these cards and if i can’t use them for my games i will shut down my account;;mastercard # 5113 4061 8069 6264..date o6/14 …322..last 3 digits..please get back to me asap.Thank U;;LINDA Mc DOWELL