• On ZDNet: Free Internet: Gone in 5 years
November 3, 2008 5:20 PM PST

Facebook moves into micropayments for gifts

by Josh Lowensohn

Since its launch in early February of last year, Facebook's online gift store has run off of standard U.S. dollars, letting users purchase gifts one at a time, or in bundles at a slight discount. However, starting Monday the popular social network has moved to a micropayment system where each point represents a cent, opening up its gifts marketplace to items outside of the $1 standard.

There are several benefits to using such a system, the least of which is user convenience. Microsoft, which has had its own points system since the advent of the Xbox Live Marketplace, has forced users to buy points in packs ahead of any purchases, in effect requiring user credit before a sale. The result of this is that users almost always have a leftover balance which can rest in Microsoft's accounts, earning the company interest until the user's next purchase.

The big difference between Microsoft's system and Facebook's implementation is that Facebook has stuck with the same monetary standard that most of its users are locked into. In comparison, Microsoft points are approximately 25 percent more per 100 than a dollar, which becomes confusing at higher amounts--and even more so at the international level. So much so that several developers have created currency translators and sites to help people figure out how to even out their remaining balances.

Facebook gifts must now be purchased in 'points' instead of U.S. dollars, opening up a new system where items can be above or below the magic 100 mark.

(Credit: CNET Networks)

So what does this mean for the future of gifts and other transactions on the service? We're likely to see both higher- and lower-priced items, which will result in customers having remainder balances. It's something that will entice (and require) them to buy more. So far Facebook is offering point packs in chunks of $1, $5, and $10 while the price points of gifts remain at the standard 100-point ($1) and free denominations. Facebook says free gifts will continue to be offered, however expect to see sub-100-point, and more expensive "premium" gifts coming in the very near future.

[via VentureBeat]

Josh Lowensohn is an associate editor for Webware.com, CNET's blog about cool and otherwise useful Web applications and services. If you've found a site you'd like profiled, shoot him an e-mail. E-mail Josh.
Recent posts from Webware
Firefox 3.5 and the potential of Web typography
Sites that help you lodge complaints
Google App Engine misfires
Microsoft: Bing needs to improve when news breaks
Google finally sued by makers of Finally Fast
Google Toolbar for IE speaks your language
Bing brings out the tweets
Google Search optimized for a mess of phones
Add a Comment (Log in or register) (8 Comments)
  • prev
  • 1
  • next
by Iamkar33m November 3, 2008 5:42 PM PST
Who spends money to send someone a picture of something over the internet? Is this supposed to be a way for Facebook to profit off people with ADHD?
Reply to this comment
by JoyceBettencourt November 3, 2008 6:32 PM PST
Beyond the Xbox Live Marketplace, we see the immense power of micro transaction in the virtual world of Second Life (http://secondlife.com).

Of course, the big difference in those transactions (http://secondlife.com/whatis/economy_stats.php) is they are not all happening between the operating company of Second Life (Linden Lab) and the end consumer/player, but also player-to-player transaction, which make up the bulk of all sales on their platform. Because of this, the exchange rate, like a real life economy, can fluctuate and has even seen real life phenomenons such as day trading in the online currency of Lindens.

It will be interesting to see how the roll out of a micro transaction model effects Facebook.
Reply to this comment
by veghs November 3, 2008 6:41 PM PST
This is stupid. FB is going down the wrong road. I hate these apps which "throw" stuff at other users and other ridiculous and useless waste of bits which clutter FB.
Reply to this comment
by manualfunky November 3, 2008 8:10 PM PST
even more proof that the majority of people are stupid idiots... buying gifts that have no physicality to give to friends on Facebook? WHere does all this money go? and how were the people paying for this ***** even allowed access to the internet in the first place?

Heres a picture of a penguin, it cost me a dollar, i hope you like it...
Reply to this comment
by therealgeeves November 4, 2008 2:54 AM PST
Here's a picture of a naked penguin... hope you like it cost me $1.
by NYJester November 4, 2008 8:43 AM PST
I prefer this application for Facebook-based shopping. It's a lot more fun and the selection is far superior.

http://www.sortprice.com/facebook_wishlist/

<a href=?http://www.sortprice.com/facebook_wishlist/.html?>www.sortprice.com/facebook_wishlist/</a>
Reply to this comment
by mayankdhingra November 8, 2008 10:47 AM PST
The first time I heard of paid virtual gifts I too felt the same way(not that I completely feel different now) but then I think I might have felt the same way when I heard about second life.That said, I feel there's potential in this space after all and the more fb apps I use the more I optimistic I feel. If people can share virtual gifts for free I don't see any reason why at least some of them will mind paying of some special/different virtual gifts.
Reply to this comment
by bvdon May 25, 2009 9:58 PM PDT
Anyone thinking this is limited to pictures and other such things are missing the big picture. This could easily translate to any sort of transaction including services and products -- not just images.
Reply to this comment
(8 Comments)
  • prev
  • 1
  • next
advertisement

About Webware

Say No to boxed software! The future of applications is online delivery and access. Software is passé. Webware is the new way to get things done.

Add this feed to your online news reader

Webware topics

Making sense of Windows 7 upgrades

faq The basics and the fine print on Microsoft's options for those eyeing the next operating system from Redmond.
• Full Windows 7 coverage

Road Trip 2009: Big Sky Country

CNET News reporter Daniel Terdiman takes his car full of gadgets to the Rockies and the Great Plains in search of tech, science, nature, and more.
• America's Fortress: Cheyenne Mountain

advertisement

Inside CNET News

Scroll Left Scroll Right