Can someone explain to me why FB chose to use credits over just actual money balances? Is it psychologically designed to get people more willing to fritter them in the same way it's easier to blow chips in a casino than real cash? Is it a way to funnel multiple currencies into one global currency?
It just seems like an extra unnecessary convoluted layer to me. Having a credit balance over real money balance is unnerving for me and would mean I would never put too much money on at any one time, there's too much risk of something bad happening like quick devaluation. Also it would probably be far less liquid and harder to convert back to cash.
Probably because FB is not a bank, and there are strict regulations in most countries for companies that store people's money like banks. Paypal is not a bank either, but I'd guess storing credits is still easier regulation-wise.
IIRC, most credit card fees are percentages, so the number of transactions wouldn't matter. I've never dealt directly with it, so I'm not 100% certain though.
Credit card fees are a base amount (which varies based in the auth method) plus a percentage of the sale. So for smaller transactions, the effective percentage is higher. Have you ever been to a store with a minimum purchase amount for credit cards? This is why.
Card fees depend on how big you are though. Large UK supermarkets have no minimum purchase amount for credit cards, because they have the clout to negotiate a better deal. Facebook is probably big enough to do the same.
It will be really interesting if this gets approved for the iOS app store, as it's in flagrant violation of the "must use iTunes payments for in-app purchases" rule. But what's Apple to do — no Facebook on iPhone? That would be insane.
Would be interesting if users could make "in-app"-purchases via the fb app by momentarily going to mobile safari and then coming back. It's cumbersome but gets around Apple's policies.
I'm curious about Square's reaction to this. It seems like people could literally start paying with Facebook at restaurants and bars. Now the charges are just part of the monthly phone bill instead of a monthly credit card bill. For that matter I wonder what implications this could have for credit card companies. Anyone know if, say, AT&T pays the same charge for accepting credit cards as small merchants?
Short term, paying with FB for physical goods (eg. in restaurants, bars) is an unlikely outcome because carrier billing involves giving up an enormous percentage of the transaction to the carriers.
In the U.S., carrier billing typically involves yielding a 40 - 50% margin to the carriers. In Europe, the percentages are lower -- carrier billing is a more mature market there -- but they still top out around 20 - 30%. In developing markets, margins can go as high as 75 - 80%.
I don't know what sort of relationship FB has built with the carriers and what sort of percentage merchants using the billing system will ultimately end up with -- after all, both FB and the carriers will take a cut -- but I would be surprised if it isn't in line with the current percentages charged for carrier billing.
For virtual goods, carrier billing service providers claim the frictionless nature of the transaction and the reach (6 billion mobile subscribers globally) make up for the small margins.
Long term, of course, things could very well turn out differently.
Wow those are high! If the whole "paying with your phone" concept catches on perhaps carriers will offer more competitive rates and more than make up the loss on volume of transactions. The current state of retail credit card processing with the signatures and receipts does seem out-dated. Would be so much easier to just wave my phone across some reader. Or just leave the phone in my pocket and use NFC somehow.
Google also allows carrier billing in Play (theoretically; it failed when I tried to use it), but considering that Google's whole cut is 30% they'd be losing money on every transaction if they pay 40% to the carrier.
My biggest barrier to ever using something like this is trust. Facebook has screwed with privacy policies, and over-complicated application data-sharing settings so many times that I can't imagine funneling money through their platform. While I trust them with some of my personal information which has value, there's just no trust there for me when it comes to actual money. Psychologically, they rank below Paypal in my mind ... and that's pretty low.
I dunno. Sharks. Laser beams. The works. At least it finally might bring mobile electronic payment systems in the US up to the same standard as in Africa. Will take the US a while to catch up though.
For me, it's just adding an unnecessary company in the middle of a transaction.
When I buy something, I accept that there's somebody selling something, and frequently a credit card company facilitating that transaction. Why do I need Facebook to know what I'm buying when purchasing things has already been made easy-enough for most cases? With Facebook inserting themselves into the checkout process, I'd be giving them something of value without really getting anything for it - so why would I do it?
Maybe it's because i am in Europe, where paypal is regulated as a bank and has a ton more due diligence to do, but i use paypal extensively for business and i just don't see those problems. My account was restricted a few times always asking for further documentation after which it was restored (it does take quite a long time, but not more than a bank would). That actually makes them more trustworthy to me, because i know they are actively fighting fraud.
Contrast that with facebook: When i received my facebook credits payments, their support team was quite clueless when i asked them what is their billing address and VAT no (required here in Urop). they even gave me the wrong info that the payments came from the US, which resulted in me being fined for misreport.
I actually don't worry that they'd screw with the money at all. They are professional & big (think: Won't go away, can pay from their pocket if they screw up) enough in my book to trust them with transactions.
Unless you consider that you're now not only giving them data about your private life, friends and preferences, you add the 'successful conversion, bought X' data point to a data set that is already too big by my standards.
It's like combining my address book, private pictures, credit card bills and entering that data into a huge corporate database so that I can chat and plough a virtual field.
Right. As if it wasn't obvious from day one of Facebook credits that they will try something like this in the future. I'm surprised it took them this long. Not that I plan on using it or anything - I've almost completely gave up using my FB account.
Facebook's S-1 filings show that this was inevitable. It outlines the importance of controlling the mobile platform and avoiding the disruption to the desktop platform.
> The goal is to make it much easier to pay for in-app purchases. It is well known that the more steps users have to go through to verify payment information on a mobile device, the more likely they are to abandon that purchase halfway through the process.
I wonder how Apple will react to that. They're pretty keen on banning apps that don't give them 30% of in app purchases. If Apple doesn't reject this they will have some explaining to do.
Policies like that dissolve on this scale. It's not like some random auditor in a cubicle in the app store division pulls up the next app to review in their queue (hm... next is "Facebook"...) and rejects it because it has a payment option that doesn't go through Apple's process.
What happens is that Mark calls Tim, their people meet, and a bunch of lawyers write up a contract that the rest of us will never see.
I can confirm this having submitted a popular app that was borderline violating itunes T&C. While we never had the honour of Steve giving us a call, PR and product people were talking to us in the background. I expected them to be the toughest app store to deal with but they were really quite good.
Given the small amount of money Apple makes from the store I would imagine that user experience is a higher priority for them. It reflects very badly on Apple if their users are able to hand over credit cards to dodgy third parties through 'their' apps.
Apple got Amazon, Netflix, NY Times and a whole bunch of other big names to givein to their in app rules. The DOJ will have a field day if they special case Facebook.
Amazon doesn't, they had to remove the ability to purchase anything from the app. And that includes linking out to Safari for the purchase. Ditto for the Dropbox API. The NY Times definitely pays the 30%.
Square doesn't do in app purchasing of virtual goods. That's what Apple bans (see Amazon Kindle, Dropbox API, NY Times, etc). Square let's you the app user sell something, not pay for something.
I've seen FB payments hyped to the moon lately as a revenue solution to Facebook's advertising 'problems' - my two cents are that Facebook is going to completely flop at mobile payments.
I don't think they can execute the product properly, from either a point of purchase proposition or from an easy-to-use perspective. PayPal struggles with complexity, and I believe Facebook's offering will not only be more confusing than PayPal but more complex. The world only needs (and or will use) more payment solutions if they're radically better, I don't see Facebook building that product, despite the user base they can tap into.
I think Facebook is failing to fix the problems in their existing core product, while they lurch forward into areas they have demonstrated a limited ability to deliver on.
The gist of your comment is that you think they can only create something that's more confusing and complex than what PayPal offers? But they already have given a mockup of their two step simple procedure.
The biggest failure of all the 'credit' and 'mobile carrier' solutions is the 15$-50% take they deduct, making it worthless for anything but virtual goods
I remember reading that their are some online games or communities in China that have billion of dollars worth of their own currency in the market. It is so large that they fix the fluctuations to the local exchange rate.
Unsure if this is the same story, but (Online) Gold Farming is estimated to be worth $3billion. (1)
Maybe FB are looking to mimic this growth. Add in the psychological and control aspects and you have your very own economy.
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[ 4.4 ms ] story [ 118 ms ] threadIt just seems like an extra unnecessary convoluted layer to me. Having a credit balance over real money balance is unnerving for me and would mean I would never put too much money on at any one time, there's too much risk of something bad happening like quick devaluation. Also it would probably be far less liquid and harder to convert back to cash.
They don't have credit cards but are now able to make in app purchases.
Think of it like the anti-bitcoin.
Would be even more interesting if Google pull Facebook app out of the Android Play Store. (I bet Google would be very happy to do so)
Not a fan of the trend, but I suppose it does unify the user experience.
Short term, paying with FB for physical goods (eg. in restaurants, bars) is an unlikely outcome because carrier billing involves giving up an enormous percentage of the transaction to the carriers.
In the U.S., carrier billing typically involves yielding a 40 - 50% margin to the carriers. In Europe, the percentages are lower -- carrier billing is a more mature market there -- but they still top out around 20 - 30%. In developing markets, margins can go as high as 75 - 80%.
I don't know what sort of relationship FB has built with the carriers and what sort of percentage merchants using the billing system will ultimately end up with -- after all, both FB and the carriers will take a cut -- but I would be surprised if it isn't in line with the current percentages charged for carrier billing.
For virtual goods, carrier billing service providers claim the frictionless nature of the transaction and the reach (6 billion mobile subscribers globally) make up for the small margins.
Long term, of course, things could very well turn out differently.
Whatever PayPal does, Facebook can do too.
When I buy something, I accept that there's somebody selling something, and frequently a credit card company facilitating that transaction. Why do I need Facebook to know what I'm buying when purchasing things has already been made easy-enough for most cases? With Facebook inserting themselves into the checkout process, I'd be giving them something of value without really getting anything for it - so why would I do it?
You're certainly far, far from the norm because PayPal has tens of millions of active accounts and even people who hate it use it.
So, the biggest barrier for fb for me has nothing to do with trust and more to do with acceptance by merchants.
[imo] should read
and even people who hate it _have to_ use it
Contrast that with facebook: When i received my facebook credits payments, their support team was quite clueless when i asked them what is their billing address and VAT no (required here in Urop). they even gave me the wrong info that the payments came from the US, which resulted in me being fined for misreport.
Trust facebook? Maybe in 10 years.
Unless you consider that you're now not only giving them data about your private life, friends and preferences, you add the 'successful conversion, bought X' data point to a data set that is already too big by my standards. It's like combining my address book, private pictures, credit card bills and entering that data into a huge corporate database so that I can chat and plough a virtual field.
I wonder how Apple will react to that. They're pretty keen on banning apps that don't give them 30% of in app purchases. If Apple doesn't reject this they will have some explaining to do.
What happens is that Mark calls Tim, their people meet, and a bunch of lawyers write up a contract that the rest of us will never see.
Given the small amount of money Apple makes from the store I would imagine that user experience is a higher priority for them. It reflects very badly on Apple if their users are able to hand over credit cards to dodgy third parties through 'their' apps.
I don't think they can execute the product properly, from either a point of purchase proposition or from an easy-to-use perspective. PayPal struggles with complexity, and I believe Facebook's offering will not only be more confusing than PayPal but more complex. The world only needs (and or will use) more payment solutions if they're radically better, I don't see Facebook building that product, despite the user base they can tap into.
I think Facebook is failing to fix the problems in their existing core product, while they lurch forward into areas they have demonstrated a limited ability to deliver on.
The biggest failure of all the 'credit' and 'mobile carrier' solutions is the 15$-50% take they deduct, making it worthless for anything but virtual goods
I remember reading that their are some online games or communities in China that have billion of dollars worth of their own currency in the market. It is so large that they fix the fluctuations to the local exchange rate.
Unsure if this is the same story, but (Online) Gold Farming is estimated to be worth $3billion. (1)
Maybe FB are looking to mimic this growth. Add in the psychological and control aspects and you have your very own economy.
http://news.discovery.com/tech/virtual-gold-farming-compared...