Facebook launches local currency payments API, will officially end Facebook credits September 12

creditsAfter announcing its intention to end Facebook Credits last March, Facebook has launched the local currency payments API today. Replacing Facebook Credits, the local currency payments API has been put in place to simplify purchase experience, improve payments flow and make it easier to price virtual goods globally.

Facebook has asked game developers to integrate into their current and future apps, giving a 90 day window to migrate to the API. After the 90 days, which falls on September 12, Facebook will only accept payments through the API and no longer accept Facebook Credits.

Facebook has also stated that it will also be depreciating Payer Promotions for Facebook Credits and will reintroduce to local currency in the next few months. It will also depreciate Facebook-sponsored support for TrialPay offers, but TrialPay will continue to support the promotions through a direct integration solution. Instead of using Facebook’s currency payments API, integration support will be supported by direct integration. Only technical integration will be different, fees will not change and advertising rules will not change.

[EDITORS NOTE: Due to misunderstanding of the original blog post, we first reported that Facebook would be depreciating TrialPay. To correct this mistake, Facebook will not be eliminating offers, but will move from a Facebook API to a direct integration with TrialPay. Facebook has since updated their blog post to better communicate the migration.]

The new currency payments API will improve app performance by caching static prices with Facebook, but developers will also be able to price items dynamically. In early tests with select game developers, Facebook found new payments API provided for a faster and smoother overall users experience.


Facebook shares new documentation for local currency pricing, sets migration for Q3

creditsFacebook today provided updates regarding its transition from Credits to local currency pricing. The company offered new documentation for game developers and announced that migration will occur in Q3 this year.

Facebook decided to phase out Credits in favor of a user’s local currency — dollars, pounds or yen, for example — in June 2012. This allows the social network simplify the purchase experience and give developers more flexibility. 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, as opposed to pricing their virtual goods in $0.10 USD increments as was required when Credits became mandatory in July 2011. This also eliminates any confusion that resulted from users trying to think about conversion rates for dollars, Credits and in-game currency.

Facebook introduces universal gift card that friends can reload for different retailers

featured imageFacebook today announced the Facebook Card, a resusable gift card that can be loaded with balances for different retailers when a user’s friends buy them gifts through Facebook.

The social network has added a number of new partners to its Gifts platform, including Target, Jamba Juice, Olive Garden and Sephora, who will offer gift cards to be purchased on Facebook. But instead of sending individual gift cards for each restaurant or retailer, or sending multiple gift cards for the same business, Facebook will send users one card that can maintain balances for several outlets.

For example, someone might receive a $50 gift card to Target. They’ll receive a Facebook Card in the mail. When another friend gifts them $10 to Jamba Juice, that amount will be automatically added to the same Facebook Card. Users will be able to view their different balances on Facebook.com and within the mobile app. Facebook says this option will roll out to U.S. users beginning today. Because Gifts are not available internationally, Facebook Card is also limited to the U.S. for now.


Facebook Gift Cards and others make gains to be among top emerging Facebook apps

Facebook Gift Cards entered our list of emerging applications by monthly active users this week at No. 14 with 41 percent gain.

We define emerging applications as those that ended with between 100,000 and 1 million MAU in the past week. This week’s top apps grew from between 60,000 and 170,000 MAU, based on AppData, our data tracking service covering traffic growth for apps on Facebook.

Facebook Gift Cards is an app where users can buy and redeem Facebook Credits that can be used toward purchases in games and other apps that use Facebook Payments. The social network recently added a link to the Facebook Gift Cards app in its App Center. Users may also be visiting more often as they begin shopping for the holidays.


Facebook roundup: employees sell shares, anti-trust suit over Credits, Nasdaq compensation plan and more

Facebook execs and board member sell some shares – With the end of an employee lockout this week, some top Facebook executives have sold portions of their shares. COO Sheryl Sandberg sold less than 2 percent of her shares for more than $7.4 million. Chief Accounting Officer David Spillane sold 256,000 shares, which is more than half his entire stake, raising $5.4 million, and General Counsel Ted Ullyot sold 149,075 shares, getting more than $3 million. Early investor and board member Jim Breyer sold $81 million worth of Facebook stock earlier this week. Breyer still holds more than 7.2 million Facebook shares. VP of Engineering Mike Schroepfer filed an SEC document today indicating that he is not selling any shares at this time. Facebook stock closed at $21.18 today, down nearly 9 percent from last week.

Facebook sued over Credits - Kickflip Inc., which does business as Gambit, sued Facebook this week over claims that the social network broke antitrust laws with its Credits program. Business Week says Gambit was the leading virtual currency and payment-processing provider to social game developers. Gambit claims Facebook’s decision to require Facebook Credits in 2009 destroyed a “vibrant and competitive market.” The case has been filed in federal court in Wilmington, Delaware. Facebook says the claim is “without merit.”

SEC to look more closely at Nasdaq compensation plan – The U.S. Securities and Exchange Commission has said it would extend proceedings to review Nasdaq OMX’s $62 million compensation plan following the exchange’s botched handling of Facebook’s initial public offering. Brokers say they collectively lost around $500 million because of issues on the day of the IPO, including delays in orders being put through and confirmations being returned.

FB underwriters spent millions to support stock on IPO day – Facebook’s underwriters may have spent about $66 million supporting the stock’s price on the day of the company’s initial public offering, according to a blog post by economists Thomas Eisenbach and David Lucca. The report explains how underwriters likely put in bids at $38 and $40 per share as the stock threatened to fall below the $38 offer price. This would mean underwriters spent about 40 percent of their underwriting commissions. “If this estimate is correct,” the economists say, “underwriters’ reputational concerns and obligations to the firm may have outweighed their short-run profit motive.”

Facebook roundup: stock price slips, Chill raises $8M, new currency API and more

Facebook shares back down to $31 – Facebook stock is down 5 percent from last Friday, closing at $31.09 today. The stock slipped after a number of analysts suggested that the company might report underwhelming earnings this quarter. Six of Facebook’s 11 IPO underwriters initiated coverage with a Hold rating or the equivalent. Lead underwriter, Morgan Stanley, and Goldman Sachs and JP Morgan all have the equivalent of a Buy recommendation. Facebook announced today that it will hold its Q2 earnings call on July 26.

Chill raises $8M – Social video site Chill, which integrates Facebook Open Graph, announced that it raised a $8-million round led by Kleiner Perkins Caufield & Byers and William Morris Endeavor. The app has more than 10 million monthly active Facebook-connected users, according to AppData.

Facebook creates API to show pricing in user’s local currency – Facebook launched an API on Thursday that gives developers access to a user’s preferred currency and the conversion rate to Credits. This lets developers show prices in a user’s preferred currency in their in-game stores.

Springpad now lets users import Likes – Note-taking app Springpad announced new Facebook integration features that allow users to import and organize their Facebook Likes so that they can search them. The app also layers on information from Rotten Tomatoes, Open Table, Foursquare and other services to provide more context and recommendations around a user’s existing interests.

Timeline app leads to 150 percent increase in traffic for Endomondo - Workout tracking app Endomondo, released new stats on the success of their app for Facebook Timeline. In addition to passing 10 million downloads, Endomondo announced that its users share 50,000 workouts per day on Facebook, and it has seen a 150 percent increase in traffic from Facebook since the launch of its Open Graph integration.

Ad tool shows advertisers if their images are the right size – Facebook added a widget to its self-serve ad tool this week to show advertisers what the exact dimensions should be for their ad images. The feature will show users if the image they uploaded is too large or small.


Facebook updates payments terms to reflect addition of subscriptions, Credits phase out and more

Facebook has updated its payment terms for both users and developers following Tuesday’s announcement that it would support monthly subscription billing for apps and games on its platform and phase out Credits in favor of a user’s local currency.

Note that Facebook’s transition from Credits to local currency is not an indication that the social network is getting out of the payments business. In fact, it is expanding it to be more similar to Apple’s iTunes App Store model, rather than emphasizing virtual currency. This should give Facebook more flexibility as it looks to monetize apps beyond games.

Overall, the new policies are more comprehensive and better organized, which is important as the number of users and developers who use Facebook’s payments platform expands over the next year to include more non-game transactions.

For users, the social network added more information and terms about various payment methods, and made it clearer that users under 18 cannot use Facebook Payments only with the involvement of a parent or guardian. The age stipulation was previously one of the final points on the user terms page. Now it is in the second paragraph. The payment methods section, including a definition of Facebook Credits, is completely new.

In the new payment methods section, the company expanded its payments terms to explain its policy around gift cards and introduced terms around mobile billing. For example, Facebook noted that it is not a bank and that gift card balances are not deposits and do not earn interest. Surprisingly, Facebook didn’t make any mention of mobile billing in its previous policy. The social network recently rolled out a two-step payments flow for mobile apps, but has supported mobile carrier billing for years.

Readers can compare Facebook’s new user payment terms with its previous policy from March 27 here.

For developers, Facebook changed its “Facebook Credits Terms” to the new brand of “Facebook Developer Payment Terms.” The terms page now includes more explanation of payouts and introduces the term “developer balance.”  Whenever developers complete a sale on the platform, Facebook will credit the proceeds, minus a 30 percent service fee, to a developer’s balance. The new policy is reorganized with clearer headlines and explanations, for example, including a section called “Your Responsibilities and Risks.” The section compiles conditions that were previously incorporated into several different areas of the document.

Developers can compare Facebook’s new developer payment terms with its previous credits policy from November 2011 here.

Facebook to launch subscription billing for apps, transition from Credits to local currency

Facebook will soon support subscription billing for apps on its platform, according to a post on the company’s developer blog. The company will also phase out Credits in favor of a user’s local currency — dollars, pounds or yen, for example.

Subscriptions will launch to all developers in July, though Zynga and Kixeye are already testing the feature for their games. This change gives developers a way to charge users on a monthly basis, rather than relying on individual virtual goods purchases. The alternative model could help developers and Facebook better monetize. It could also be a start to getting non-game developers to try Facebook’s payment platform.

As our sister blog Inside Social Games explains, subscriptions could lead players to spend more in games and also makes Facebook a better option for developers of free-to-play browser-based massively multiplayer online role-playing games.

We’ve previously written about how the social network was likely to introduce subscriptions as a way to monetize non-game applications. Because Facebook Credits aren’t required for these apps, only a few developers use them. For example, some studios offer movie rentals for Facebook Credits. These companies might now consider testing a subscription model that gives users access to more movies or special features if they sign up for a multi-month package. Facebook subscriptions will also support free trial periods, which could incentive users to sign up.

Other businesses built on Facebook, such as professional networking app BranchOut or news apps like Washington Post Social Reader, might find uses for subscriptions, however the social network’s 30 percent fee is likely to turn off many developers. For companies like Spotify and Netflix, which have to pay huge licensing fees to rights-holders, losing 30 percent simply isn’t an option unless they significantly increased their prices. But at higher price points, consumers might not decide to subscribe at all. [Update 6/19/12 2:08 p.m. PT - A screenshot of a sample subscription settings page on Facebook's developer site includes Spotify, MOG and RunKeeper as sample apps using subscriptions. It's unclear whether these are simply examples or actual developers in the beta program.]

Although the 30 percent fee is standard for app platforms like Apple and Android, it is far more than what online payments systems like PayPal charge. PayPal takes a 2.9 percent fee plus a $0.30-fee for each transaction. Facebook acknowledged in a regulatory filing that it might reduce its fee, but for now the 30 percent seems to stand.

Facebook, though, is in a unique position to streamline payments and offer developers useful data about who’s paying for subscriptions. If businesses can automatically gather information they would otherwise have to ask users for through forms, Facebook’s payments platform would be more attractive. Ease of implementation, increasing conversions and providing useful reporting are all areas the social network will need to improve as it expands its payments business.

With the latest phase out of Credits and by now supporting pricing in local currency, Facebook can simplify the purchase experience and give developers more flexibility. 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. This also eliminates any confusion that resulted from users trying to think about conversion rates for dollars, Credits and in-game currency. Facebook says it will convert any Credit 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. People can still redeem gift cards and store unused balances in their account. Any apps or games that sell virtual items will be required to use local currency by the end of the year.

The company first introduced what it called “Pay with Facebook” in May 2009. That eventually got combined with the Credits program associated with virtual gifts that users could buy and post to each other’s profiles. In July 2011, Facebook made Credits mandatory for social games, leading payments and fees revenue to make up about 18 percent of the company’s revenue in its most recent quarter — up from a 13 percent in Q1 2011. Only 15 million users — fewer than 2 percent of total monthly active users — paid for virtual goods on the platform in 2011. Facebook has helped individual game developers who wanted to implement a recurring pay cycle in the past, but for the most part, subscriptions haven’t been an option until now.

Facebook rolls out 2-step payments flow for mobile web apps

Facebook today begins rolling out a new mobile payments flow that brings the number of steps down from seven to two, the company said in a blog post.

The new carrier billing option, announced in February, is now live for the U.S. and the U.K., but will be available worldwide soon. Mobile app developers will be able to charge their players’ monthly phone bills in only two steps and without requiring users to type anything. Having a fluid payments flow could encourage developers to focus more attention on HTML5 applications than they have in the past.

Mobile web developers who already integrate Facebook payments don’t need to make any changes to their apps. Those who want to use Credits on their mobile website can use Facebook’s Payments API. Developers can see an example of the payments flow in Gamzee’s Skyscraper City.

Sprint, AT&T, T-Mobile, Vodaphone, Orange, O2 and Three will support mobile payments for users in the U.S. and the U.K. A list of participating carriers by country is available here. Though it’s hard to be sure exactly what percentage of its revenue share Facebook is giving up to facilitate the new payment option, the company could be losing a substantial portion of its 30 percent cut. Earlier this year Ray Anderson, the chief executive of carrier billing company and Facebook service partner Bango, revealed carriers often provide large company like Facebook with much more favorable carrier billing terms than smaller players receive. However, even with some carriers now remitting 90 percent of carrier billing revenue, by the time Facebook pays the carrier and any third-party payment processers, it could be losing up to half its share. We suspect the company is willing to make the sacrifice to bolster HTML5 applications and work around the barriers Apple and Google have set up to prevent Facebook from monetizing native apps that integrate its platform.

The social network is also beginning to monetize its own mobile app with advertising. On Tuesday the company announced that advertisers can now choose to run mobile-only ads, which introduces new opportunities for app developers to acquire users with Sponsored Stories.

Investing in Facebook: Rick Marini of BranchOut

This week, Inside Facebook asks people who have built businesses on the Facebook platform why they believe in the company. These are the people that are truly invested in Facebook, whether or not they bought stock.

For Part 4 of our series, we spoke with Rick Marini, founder and CEO of professional networking service BranchOut. The Facebook app lets users organize their professional connections, see which friends have worked at companies their interested in and search for jobs. The company has raised more than $49 million in venture capital since it launched in 2010.

Seeing the potential of Facebook

Marini realized the potential of Facebook when the social network moved in on the turf of his own company. In 2009, Marini created Superfan.com, a social entertainment site that allowed users to express themselves by becoming a fan of everything they love in life. It soon became clear that Superfan couldn’t compete with Facebook’s own fan pages product. When Facebook changed “become a fan” to “Like” in 2010, the number of Facebook users joining fan pages quickly accelerated.

“I realized the power of the network,” Marini says. Superfan began to incorporate sharing features so that users could “fave” things on the site and then post that activity to Facebook.

Around the same time, Marini and his team began to think about how Facebook could be applied to a number of different of industries.

“We realized there were all these verticals that should be social, that should be done on Facebook,” he says.

Developing a business idea

Marini says the most obvious industries that would be transformed by Facebook were those that were inherently social, like dating, ticketing or travel. These are things that bring people together offline, so they should be done that way online, too.

After working at job search company Monster for three years, Marini and his team still had ideas about the jobs and networking space.

“We realized no one had owned the professional side of Facebook,” he says. This seemed to have greater potential than Superfan did.

Marini and his team pivoted and became BranchOut in June 2010. They launched the app a month later.

Confidence in Facebook

Marini believes in Facebook because of its scale, the frequency with which people return to it, and the strength of connections people have there with friends and family.

“Facebook has combined [these] three big things that I don’t think anyone’s ever done,” Marini says. “That’s incredibly powerful and they still have a lot of runway.”

Then there’s BranchOut’s own quick rise. The app, which runs on the Facebook canvas and the mobile web, has more than 10 million monthly active users, according to AppData. Last month when BranchOut raised $20 million in a series C round, the company announced it had more than 25 million total registered users. Much of the app’s recent viral growth comes from Facebook’s Open Graph publishing and single sign-on for mobile.

Future of Facebook

Marini sees Facebook’s future not just in advertising but as a platform for developers.

“They want companies like BranchOut to disrupt multibillion dollar businesses,” Marini says.

In order to do that, Marini says he’d like Facebook to invest more resources in the platform so there are more engineers focused on developer relations and fixing bugs sooner.

“We want Facebook to be responsive and move as quickly as we can,” he says.

Though, Marini notes that in other areas Facebook already moves extremely fast and continues to innovate. He sees the company making big strides in mobile this year.

“I think it’s going to go from good to great,” he says. “I think they have a lot of focus to really make an enhanced experience there.”

Marini says the IPO gives Facebook the financial flexibility to attract top talent and do more deals like the Instagram acquisition so that it can stay on top of trends. As far as monetization, he says Facebook seems to be paying the most attention to advertising, though they’re looking at ways to monetize the platform better. For example, Facebook has said it might reduce the 30 percent fee it takes from developers using Credits for payments.

“For companies like BranchOut, that 30 percent doesn’t make sense,” Marini says. “Facebook gets this.”

Overall, Marini believes Facebook will continue to operate with a long vision of the future, not for short-term gain.

“They’ve made it clear they’re not going to manage the company quarter by quarter,” he says. “Mark [Zuckerberg] wants to focus on product innovation. Sheryl [Sandberg] will continue to focus on the business side.”

Read Part 1 with Clara Shih of Hearsay Social
Read Part 2 with John Corpus of Milyoni
Read Part 3 with Hussein Fazal of AdParlor 

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