Facebook begins testing “ways for users to use their Facebook credits with third-party applications on Facebook.com” in the next few weeks, a company rep told us.
What should this PayPal-like payments system look like?
We asked Lisa Rutherford, who has been in the virtual currency game for a while, running a startup called Twofish that helps Facebook application makers build and manage virtual economies.
Lisa said the way Facebook can make really big money from its payments platform is to help merchants learn about who their paying customers are and how they came to spend their Facebook currency.
With these “retail analytics” Facebook can help merchants on its platform position their online goods the same way Wal-Mart uses it’s own analytics to decide how to stock its store aisles. The more money Facebook apps make selling goods, the more money Facebook makes taking a piece of each transaction.
To become this kind of product, Lisa said Facebook’s payments platform needs to:
- Capture the right data. Lisa says only a handful of payments systems Facebook developers currently use capture the right data. Facebook’s platform needs to capture, commercial data, item data, user demographics and “then feed it into a flexible framework.”
- Offer merchants comparitive metrics. For example, the data should say to someone, hey, you’re selling pink fluffy slippers for $2. Everyone else is selling them for $4, and they’re selling as much volume as you.
- Obsessively monitor foreign exchange rates. Facebook has 225 million users worldwide and most of its growth is outside the US. That means one of the bigger challenges for Facebook will be making sure nobody gets screwed when users convert foreign currencies into Facebook currencies. Along the same lines, Facebook might have to be careful about the exchange between other virtual currencies.
- Own its own security. Security concerns are one of the biggest reasons Facebook took so long in rolling out a payments system. Lisa says for Facebook to raise its security to “banking level,” the issue it needs to own the data centres where customer data is stored and put its own employees in charge of protecting.