Facebook has begun tapping a new revenue stream with the introduction of an internal payments system, a move that might help the fast-growing social networking website achieve profitability while being less reliant on advertising. The long-rumoured payments system, which is in its early stages, will allow users to purchase Facebook “credits”, then use those credits to buy virtual goods from the third-party applications that run on the site, or from Facebook itself.
Facebook hopes that by offering a site-wide currency it will encourage more commerce on the website. By serving as the payment provider, it will capture a percentage of every transaction.
“Over time, this will be very significant,” said Ray Valdes, an analyst with Gartner Research. “Social networking sites have suffered with monetising [their services], but this leverages [the fact that] users are there on Facebook.” Valdes said revenue from its payments system could soon represent one-third of Facebook’s income.
Users are increasingly spending real money buying virtual goods and credits on the applications that run on Facebook’s platform. Zynga, the largest applications developer on Facebook, with 42m users of its games, is reported to be nearing annual sales of $100m. Together, developers working on Facebook’s platform are expected to make more than $500m this year – perhaps more than Facebook itself.