Facebook Getting Rid Of “Credits,” Adding Subscription Payments

Facebook Credits is going away; long live the Facebook payments infrastructure. Today the company is doing two things to boost payments on Facebook and simplify accepting payments for developers.

The company is adding subscriptions to enable developers or publishers to establish recurring revenue steams. Right now there are in-app payments and one-time purchases. This new offering allows app developers to charge a monthly fee for content updates or premium content.

The second thing that Facebook is doing is getting rid of the “Facebook Credits” name or brand. The company says it wants to remove friction and make it easier for developers to implement payments (through Facebook) in local currencies. According to this afternoon’s blog post:

Since we introduced Credits in 2009, most games on Facebook have implemented their own virtual currencies, reducing the need for a platform-wide virtual currency. As a result, we are updating our payments product to support pricing in local currency (ex: US dollar, British pound and Japanese yen) instead of Credits.

By supporting pricing in local currency, we hope to simplify the purchase experience, give you more flexibility, and make it easier to reach a global audience of Facebook users who want a way to pay for your apps and games in their local currency. With local pricing, you will be able to set more granular and consistent prices for non-US users and price the same item differently on a market-by-market basis.

Local currency will be implemented in Q3 and developers will have until the end of the year to make the transition. The underlying payments infrastructure will be unchanged, together with the 30 percent fee.

Facebook hopes that by “removing” friction or a bureaucratic layer from the process of charging for virtual goods it will promote more and broader usage of payments on Facebook.

For a few weeks I’ve been intending to write a very speculative and provocative article about how Facebook Credits might grow and all the ways it might be used in the real world — see Plink’s use of Facebook as a loyalty currency in fast food restaurants — as well as support an expanding commerce model on Facebook.

One interpretation of today’s action is that Facebook is expressing a smaller vision for payments.

Plink’s CEO Peter Vogel and I discussed, however, that Facebook Payments (let’s call it for lack of another way to refer to it) might still be used for things like Spotify or Netflix subscriptions through the site. Seeking to be the “Zynga of entertainment,” last year Milyoni launched a content/entertainment rental platform on Facebook using Facebook Credits as the currency.

One can envision many such scenarios where third parties sell things on Facebook or through Facebook. Putting aside the disappointing earlier performance of many retailers’ “F-commerce” experiences, there are still lots of opportunities here if done right.

Going further out on a limb I could also imagine Facebook buying one of Square’s smaller competitors and launching payments in the real world. That would also give the company a new, direct channel into the small business market which presumably Facebook is interested in. That would, however, be a big risky bet indeed.

I’m getting way ahead of myself. But it’s fun to speculate (with help from Peter Vogel) about all the things that Facebook Payments could do or be when it grows up. The question is whether Facebook shares that same vision itself.