Payment fees are becoming a huge revenue source Facebook Ditches Credits Keeps the 30% Payment Processing Fee:
Since we introduced Credits in 2009 Facebook Ditches Credits Keeps the 30% Payment Processing :
However, as far as Facebook is concerned, its payment fee structure is just fine.
The social network also allows app developers, which include many brands, to introduce subscriptions, where users are offered updated content or premium experiences for a monthly fee. The feature will be available from July, but is already being tested by developers including KIXEYE and Zynga, whose games account for about 12% of Facebook’s revenue Facebook Ditches Credits Keeps the 30% Payment Processing Fee.Facebook says that by supporting local currency pricing on its platform, it hopes to simplify the shopping experience and make it easier for brands to reach a global audience that wants to pay for apps and games.
The move was prompted by the fact that most Facebook games – especially casino games like poker – have their own virtual currencies implemented, reducing the need for credits. Facebook takes a 30% cut from transactions made on the site Facebook Ditches Credits Keeps the 30% Payment Processing Fee.
It may have previously been difficult for many users to know exactly how much they spent on Facebook due to the number of different virtual currency systems used in different games on the platform.
However, some developers may be unhappy with this move, as by converting credits into their own virtual currencies, they could incentivize users to spend more.
It can also make it difficult for developers to implement a standardized pricing strategy across the platform, similar to how brands originally struggled to find optimal pricing for mobile apps. Facebook developers will be able to price items differently by market under the new system Facebook Ditches Credits Keeps the 30% Payment Processing Fee.
Facebook’s move to shake up its payments system comes in the same month that it launched its own app center to make it easier for users to discover apps. It was also designed to help expand the company’s mobile app slate as it seeks to prove to investors that it has a long-term mobile growth strateg.
Facebook is phasing out its digital currency, opting instead to allow transactions on its domain to be denominated and processed in local merchants’ currencies, Prashant Fuloria, Facebook’s director of product management, tells us on the company’s developer blog. The shift away from Facebook Credits and towards real money has already begun and is expected to be completed in the next few months Facebook Ditches Credits Keeps the 30% Payment Processing Fee.
Even though Facebook Credits is being canceled, the social network is keeping its payment processing pricing model intact. So all transactions, in whatever currency they may be processed, would still be subject to a 30 percent fee charged to the seller’s account. Payment fees are becoming a huge source of revenue for the social media giant all the time, and are quickly taking up more and more space on the ever-dominant advertising channel. And the stakes are high.
Facebook credits scrapped Facebook Ditches Credits Keeps the 30% Payment Processing Fee.
Here’s what Facebook’s Fuloria has to say about his company’s transition from credits to real money:
Since we introduced Credits in 2009, most games on Facebook have implemented their own virtual currencies, reducing the need for virtual currency for the entire platform. As a result, we are updating our payment product to support pricing in local currency (eg US Dollar, British Pound and Japanese Yen) instead of credits.
By supporting local currency pricing, we hope to make shopping easier, give you more flexibility, and make it easier to reach a global audience of Facebook users who want to pay for your apps and games in their local currency. With local pricing, you’ll be able to set more detailed and consistent pricing for non-US users and price the same item differently based on each market.
This decision makes perfect sense to me. Credits made the transaction process more difficult than it needed to be, especially considering the fact that app developers also tended to introduce their own currency. So, to buy a digital chicken in FarmVille, you must first buy Facebook Credits with real money and then convert them into Farm Cash, the in-game currency used by Zynga, the maker of FarmVille Facebook Ditches Credits Keeps the 30% Payment Processing Fee .
I think all these in-game currencies should go as well, which would benefit everyone involved, including developers by the way, who might find that a simplified transaction process leads to increased sales. On the other hand, I don’t see a single advantage to having your own digital currency. Obviously, Facebook executives share my opinion.
30 percent payment processing fee
Facebook Drops Credits, Keeps 30% Payment Processing Credits may be gone, but Facebook’s “core payment product, along with support for global payment methods and policies, will remain the same,” says Fuloria. So developers would still be charged a fee of 30 percent of the transaction amount for every payment they accept on Facebook. This is a huge price, but there is no alternative Facebook Ditches Credits Keeps the 30% Payment Processing Fee.
To get an idea of how high Facebook’s processing fee is, consider that if a developer were to sell their digital goods on their own site, their payment fees would never be more than three percent or so, and most of their transactions would be processed at a significantly lower speed Facebook Ditches Credits Keeps the 30% Payment Processing Fee.
However, when it comes to Facebook, its payment fee structure is fine. In the first quarter of this year, payment fees accounted for 18 percent of the social network’s total revenue, up from 15 percent in 2011 and less than five percent in 2010. At this rate, payment processing could overtake advertising in a few years as the largest producer company income. Still, there are potential pitfalls along the way, the biggest of which is Facebook’s dependence on Zynga, as the social network itself admitted in its prospectus Facebook Ditches Credits Keeps the 30% Payment Processing Fee:
In 2011 and the first quarter of 2012, we estimate that up to 19% and 15% of our revenue, respectively, came from payment processing fees from Zynga, direct advertising from Zynga, and revenue from third parties for advertisements displayed on generated pages.
Zynga apps. If Zynga does not maintain its level of engagement with our users, or if we are unable to successfully maintain our relationship with Zynga, our financial results could be harmed Facebook Ditches Credits Keeps the 30% Payment Processing Fee.So the lion’s share of Facebook’s fee income was generated by Zynga, and that should indeed be a source of concern.
I expect Facebook’s reliance on Zynga’s performance to diminish over time. The problem I see is that the transaction rate on the social network is too high to be sustainable in the long term. Developers are quietly, if reluctantly, going along with it for now, but it’s unlikely to last too long Facebook Ditches Credits Keeps the 30% Payment Processing Fee.
I suspect sooner or later people will start to voice their frustration with the 30 percent rate, just as retailers keep protesting credit and debit card fees (and won big on the debit card front last year!). Facebook will eventually have to lower its rate or risk being on the wrong end of an antitrust lawsuit. The social network uses its monopoly position Facebook Ditches Credits Keeps the 30% Payment Processing Fee.
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