Facebook Begins Testing Mobile Payments for Virtual Currency with Zong

We’ve been speculating for a long time that Facebook would begin testing alternative payment methods for its virtual currency, Facebook Credits. Well, Facebook’s first mobile payments test is now live through mobile payment provider Zong.

The user experience is very similar to the flow Zong and other mobile payment providers have integrated into many Facebook applications and social games. When users purchase Facebook Credits in the Facebook gift shop or in a limited number of Facebook applications, they’re now being presented with two payment options: mobile phone or credit card. Here’s how it looks (images courtesy of Payments Views):

First, users are presented with a new mobile payment option.

facebook-payments-1

When users choose the mobile option, they enter their phone number and a confirmation PIN is sent via text message.

facebook-payments-2

When the PIN is entered in the gift shop checkout confirmation, the Facebook Credits are billed to the user’s account with the mobile carrier.

facebook-payments-3

Facebook confirmed the tests to us this afternoon, saying: “We are looking at extending our virtual currency — Facebook Credits — via a very small alpha test with a handful of developers. As part of this test, we are working with Zong to explore ways for users to easily purchase credits and virtual goods by entering their mobile number, rather than credit card information, in the supported application. It’s also available as a payment option in the Gift Shop for a small group of users.”

Zong’s VP of Product and Marketing Hill Ferguson added, “As Facebook identifies ways to incorporate Facebook Credits into third party applications and help developers monetize their applications, we are testing an integration that would allow users to purchase Facebook Credits through our mobile payments service.”

Interestingly, as you may observe above, Facebook Credits cost more when paying through mobile compared to paying through credit card (USD $0.20 per credit with Zong vs. USD $0.10 per credit with credit card). Why? The simple answer is that mobile carriers currently charge high commissions for premium SMS payments in the United States – sometimes as high as 50%. So even though a Facebook Credit costs USD $0.20 through mobile, Facebook itself is likely seeing roughly the same net proceeds after the carriers (and Zong) take a cut.

The test is a big step for Zong, as it seeks to grow its worldwide customer base. As we wrote yesterday, “Given that 70% of Facebook’s audience is outside the United States, it only makes sense for Facebook to make it easier for users to make purchases using whatever payment methods are available to them.” We expect Facebook to start tests with more payment partners in the future. Decreasing payment friction is a vital step toward increasing direct virtual currency sales.

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58 Responses to “Facebook Begins Testing Mobile Payments for Virtual Currency with Zong”

  1. winandmac.com » Facebook wants more money from you using mobile payment system ZONG says:

    [...] [via Inside Facebook] [...]

  2. Premium Education says:

    “USD $0.20 per credit with Zong vs. USD $0.10 per credit with credit card” – clearly not the best way to establish Zong as a second payment option quickly, if users can easily see that they pay double the price compared to a credit card payment.

    Zong claims that their benefit is a much higher conversion rate, resulting in a higher net revenue.
    Therefore the application developers should take this higher revenue potential and cover the higher commissions by offering the same price for each payment option – especially since we’re talking about high margin virtual products.

  3. egobooster says:

    pin sms is non-compliant. careful, facebook!

  4. StraightUpSocial News Links for 8/26/2009 « StraightUpSocial says:

    [...] Facebook Begins Testing Mobile Payments for Virtual Currency with Zong [...]

  5. Sefa Yapici says:

    thanks

  6. Finance Geek » Was It Legal For TechCrunch To Publish Those Twitter Docs? says:

    [...] Facebook tests mobile payments through Zong [Inside Facebook] [...]

  7. Paying by Phone Slowly Coming to the U.S. « REVIEWER [ER] .beta says:

    [...] to spend real money to shower their friends and family with virtual gifts.  Earlier this month, Facebook started testing the use of mobile payments for its virtual currency, Facebook Credits. Facebook has partnered with mobile payments service [...]

  8. Finance Geek » Facebook Begins Testing Mobile Payments says:

    [...] Facebook spokesperson confirmed the tests with Inside [...]

  9. SearchCap: The Day In Search, August 26, 2009 says:

    [...] Facebook Begins Testing Mobile Payments for Virtual Currency with Zong, Inside Facebook [...]

  10. Paying by Phone Slowly Coming to the U.S. @ Technology News says:

    [...] to spend real money to shower their friends and family with virtual gifts.  Earlier this month, Facebook started testing the use of mobile payments for its virtual currency, Facebook Credits. Facebook has partnered with mobile payments service [...]

  11. Paying by Phone Slowly Coming to the U.S. says:

    [...] to spend real money to shower their friends and family with virtual gifts.  Earlier this month, Facebook started testing the use of mobile payments for its virtual currency, Facebook Credits. Facebook has partnered with mobile payments service [...]

  12. The Cool Tech Stuff Blog » » Paying by Phone Slowly Coming to the U.S. says:

    [...] to spend real money to shower their friends and family with virtual gifts.  Earlier this month, Facebook started testing the use of mobile payments for its virtual currency, Facebook Credits. Facebook has partnered with mobile payments service [...]

  13. Emixt – Wholesale products » Paying by Phone Slowly Coming to the U.S. says:

    [...] to spend real money to shower their friends and family with virtual gifts.  Earlier this month, Facebook started testing the use of mobile payments for its virtual currency, Facebook Credits. Facebook has partnered with mobile payments service [...]

  14. Nokia'da Mobil Ödeme İşine Giriyor! | Webrazzi says:

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  15. Facebook Looking At Payment Processing | GroupHelp.NET - Easy everything! says:

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  16. Facebook Looking At Payment Processing | Search Marketing says:

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  17. Facebook Looking At Payment Processing | Seo Services, LLC - Indiana based search engine optimization consultant says:

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  18. Facebook Looking At Payment Processing says:

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  19. Facebook Looking At Payment Processing | Media News: Internet Marketing & Online Advertisng says:

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  20. Paying by Phone Slowly Coming to the U.S. - partytow for all says:

    [...] to spend real money to shower their friends and family with virtual gifts.  Earlier this month, Facebook started testing the use of mobile payments for its virtual currency, Facebook Credits. Facebook has partnered with mobile payments service [...]

  21. Facebook’s Latest Virtual Currency Test: A “Credits Enabled” App Directory says:

    [...] busy testing out other virtual currency features. Last week, it also introduced a way for people to buy Credits through their phones, in partnership with mobile startup Zong. Add Comment [...]

  22. Facebook Looking At Payment Processing | Search Point says:

    [...] So Facebook is starting to get in to the deep end of the online game – they are looking to create a virtual wallet, according to the InsideFacebook blog. [...]

  23. The Mobile Payment Rivalry Heats Up | My Blog Channel says:

    [...] Zong, has also witnessed strong growth over the past few months. Most recently, Zong was chosen to test a pilot program for mobile payments for Facebook’s virtual currency, Credits. While [...]

  24. The Mobile Payment Rivalry Heats Up | GossipTrendz.com says:

    [...] Zong, has also witnessed strong growth over the past few months. Most recently, Zong was chosen to test a pilot program for mobile payments for Facebook’s virtual currency, Credits. While [...]

  25. The Mobile Payment Rivalry Heats Up | Tech stuff center says:

    [...] Zong, has also witnessed strong growth over the past few months. Most recently, Zong was chosen to test a pilot program for mobile payments for Facebook’s virtual currency, Credits. While [...]

  26. The Mobile Payments Rivalry Heats Up | Technology says:

    [...] Zong, has also witnessed strong growth over the past few months. Most recently, Zong was chosen to test a pilot program for mobile payments for Facebook’s virtual currency, Credits. While [...]

  27. The Mobile Payments Rivalry Heats Up | Codedstyle says:

    [...] Zong, has also witnessed strong growth over the past few months. Most recently, Zong was chosen to test a pilot program for mobile payments for Facebook’s virtual currency, Credits. While [...]

  28. The Mobile Payment Rivalry Heats Up says:

    [...] Zong, has also witnessed strong growth over the past few months. Most recently, Zong was chosen to test a pilot program for mobile payments for Facebook’s virtual currency, Credits. While [...]

  29. For m-Commerce to Work, We Need to Embrace Mobile Payments (Part 2) | Social Nibble says:

    [...] to mainstream this trend should not be overlooked. The company has begun testing mobile payments via a partnership with Zong which would allow users to purchase Facebook credits via their cell phones. Although not in effect [...]

  30. For m-Commerce to Work, We Need to Embrace Mobile Payments (Part 2) - ComponentGear.com Feed - ComponentGear.com says:

    [...] to mainstream this trend should not be overlooked. The company has begun testing mobile payments via a partnership with Zong which would allow users to purchase Facebook credits via their cell phones. Although not in effect [...]

  31. Will Facebook Get Us Ready for M-Commerce? says:

    [...] point out that just last week, Facebook announced a virtual mobile payment deal with Zong. The mobile app will let verified users purchase Facebook credits using only their cell number [...]

  32. For m-Commerce to Work, We Need to Embrace Mobile Payments (Part 2) - Partytow for all says:

    [...] to mainstream this trend should not be overlooked. The company has begun testing mobile payments via a partnership with Zong which would allow users to purchase Facebook credits via their cell phones. Although not in effect [...]

  33. Will Facebook Get Us Ready for M-Commerce? | Google Adsense says:

    [...] point out that just last week, Facebook announced a virtual mobile payment deal with Zong. The mobile app will let verified users purchase Facebook credits using only their cell number [...]

  34. Will Facebook Get Us Ready for M-Commerce? | webmarketingexperts.com.au | webmarketingexperts.com.au | says:

    [...] point out that just last week, Facebook announced a virtual mobile payment deal with Zong. The mobile app will let verified users purchase Facebook credits using only their cell number [...]

  35. Will Facebook Get Us Ready for M-Commerce? - Web 2.0 Promotions says:

    [...] point out that just last week, Facebook announced a virtual mobile payment deal with Zong. The mobile app will let verified users purchase Facebook credits using only their cell [...]

  36. tech: For m-Commerce to Work, We Need to Embrace Mobile Payments (Part 2) | tech3bite says:

    [...] to mainstream this trend should not be overlooked. The company has begun testing mobile payments via a partnership with Zong which would allow users to purchase Facebook credits via their cell phones. Although not in effect [...]

  37. DentPourDent.com » Archives du Blog » Revue de presse du week-end, autour du m-commerce says:

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  38. 從行動裝置、行動上網到行動消費 – MMDays says:

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  39. Nokia Enters Into Mobile Payment Business, Too! | Webrazzi Global says:

    [...] business while PayPal is trying to promote its own service on mobile devices. According to an info Inside Facebook got, Facebook has started testing mobile paying by a small alpha group. They are expected to put [...]

  40. Zong Launches Subscription Service For Mobile Payments says:

    [...] with Boku making acquisitions and expanding internationally and Zong picking up traction via a partnership with [...]

  41. Zong Launches Subscription Service For Mobile Payments | Submitter says:

    [...] with Boku making acquisitions and expanding internationally and Zong picking up traction via a partnership with [...]

  42. Can Starbucks Card Mobile Make Mobile Payments Mainstream? « MobileBehavior says:

    [...] Facebook mobile payments, enabling users to buy Facebook credits by billing their mobile accounts [...]

  43. Facebook Expands Virtual Goods Business with Licensed Music and Sports Gifts says:

    [...] availability of its virtual currency, Facebook Credits, for purchase in more currencies and through more payment methods recently, and we expect those tests – as well as tests of Facebook’s platform payment [...]

  44. Meet Zong+, A Mobile Payments Platform On Steroids And Potential PayPal Killer says:

    [...] and sure enough, less than one year later, the startup is picking up serious traction, including a partnership with Facebook to power the purchase of the social network’s new currency. And in 2009 alone, [...]

  45. Meet Zong+, A Mobile Payments Platform On Steroids And Potential PayPal Killer | Dipnip says:

    [...] and sure enough, less than one year later, the startup is picking up serious traction, including a partnership with Facebook to power the purchase of the social network’s new currency. And in 2009 alone, Zong [...]

  46. Meet Zong+, A Mobile Payments Platform On Steroids And Potential PayPal Killer | The Daily Tech Log says:

    [...] and sure enough, less than one year later, the startup is picking up serious traction, including a partnership with Facebook to power the purchase of the social network’s new currency. And in 2009 alone, [...]

  47. A Closer Look at Zong+, Enabling Credit & Debit Card Payments Via Mobile says:

    [...] a user wants to, say, buy some more virtual poker chips for a poker app on Facebook or MySpace, or buy Facebook Credits, Zong lets them pay using their mobile phone account. A user first clicks on the Zong logo within [...]

  48. Zong+ Una Nueva Solucion Para Micropagos | Tendencias | ebanking.cl says:

    [...] los pagos realizados a la cuenta del móvil utilizado. Recientemente la compañía ha anunciado que firmó un acuerdo con Facebook para mejorar la compra de “Facebook Credits“, la moneda virtual de [...]

  49. Para que el comercio móvil funcione, tenemos que adoptar los pagos móviles (parte 2) | ReadWriteWeb España says:

    [...] en la difusión de esta tendencia. La empresa ha comenzado a hacer pruebas de pagos móviles mediante una asociación con Zong que debería permitir a los usuarios comprar créditos de Facebook mediante sus móviles. Aunque [...]

  50. Новая эпоха интернета. | Заработай на Flash играх! says:

    [...] еще FB начали тестировать мобильные платежи через ZONG, что очень интересно. VN:F [...]

  51. Facebook and PayPal Announce Partnership for Ad and Credits Payments says:

    [...] items from the Facebook Gift Shop.” Other ways to buy items include mobile payments, via a partnership with Zong, and direct payments via credit [...]

  52. Facebook Brings on PayPal to Help Manage Payments – GigaOM says:

    [...] credits within a few applications. (Though it also opened up mobile payments to outside provider Zong last [...]

  53. Starbucks & Target the future of mobile - TheBlackFin - Thoughts from Tom Edwards says:

    [...] via mobile device is very real. From the test being conducted by Coca-cola and Starbucks to Zong there is a movement to provide a one stop shop in terms of providing payment. This is [...]

  54. The New Commerce Opportunities in the Current Wave of Innovation « @ the intersection says:

    [...] of the next 12 months, Facebook has an opportunity to become a big player in mobile payments by enabling alternative payment options for its virtual currency. Combined with the fact that Facebook not only [...]

  55. SiliconANGLE — Blog — Where the New Commerce Opportunities are in the Current Wave of Innovation says:

    [...] of the next 12 months, Facebook has an opportunity to become a big player in mobile payments by enabling alternative payment options for its virtual currency. Combined with the fact that Facebook not only [...]

  56. M-paiement: acteurs | Clement vouillon says:

    [...] 2009. En compétition directe avec Boku, le service compte un atout de taille dans sa manche avec un partenariat Facebook pour l’achat de la monnaie virtuelle du réseau social: les Facebook credits. On sait déjà [...]

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  58. Dossier: paiement mobile, m-paiement | Clement vouillon says:

    [...] 2009. En compétition directe avec Boku, le service compte un atout de taille dans sa manche avec un partenariat Facebook pour l’achat de la monnaie virtuelle du réseau social: les Facebook credits. On sait déjà [...]

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