In just a few short years, Facebook has revolutionized the way people socialize. The website has quickly become a household name, giving hundreds of millions of people a free and easy way to stay connected with friends, family, and colleagues across the world. But something much bigger could be on the horizon for the dot-com giant, as recent efforts could standardize a currency for ecommerce throughout the World Wide Web.
The internet mogul, valued at $11.5 billion earlier this year by SharesPost Inc., recently announced plans to instate its own brand of coinage, dubbed “Facebook Credits”, this September. Currently in Beta trial, this credit system could potentially create a default currency for every online market, from virtual shopping carts to online gaming. Facebook users will be able to purchase the credits with their credit or debit cards and use them for any company willing to participate in the program, essentially creating a new virtual marketplace within the largest social network in the world. Along the way, Facebook will be take a 30 percent cut of all transactions with their credits, making this a potentially very lucrative endeavor for the website. If successful, the program could possibly filch business from companies like PayPal, who specialize in providing a fraud-resistant online shopping experience by creating a safety buffer between the consumer’s banking information and virtual sellers.
Facebook’s latest push to broaden the scope of the social networking site beyond its web domain, The Open Graph Protocol, seeks to revamp an earlier project entitled Facebook Connect, which allowed users to integrate their outside web-surfing interests with their Facebook pages. Sites participating in Facebook Connect feature an option that allows people to share their opinions and other information about each site’s featured news, products, or other services.
Facebook for Transactions
The Open Graph Protocol extends the reach of the Facebook Connect program by bringing participating companies directly to the site in a marketplace atmosphere. Users will no longer have to leave Facebook’s domain to purchase third-party goods. The Open Graph Protocol will allow businesses to create their own Facebook pages, where members in the social graph have the ability to purchase or donate any amount, even in small increments, using their Facebook credits.
Previously, under Facebook Connect, Facebook served merely as an advertising tool where each user could promote a favorite company on their social pages, providing links to the company’s website. With such a large amalgamation of third-party businesses on Facebook, a Facebook currency would allow users to purchase products, services, and even donate to charities more easily and without directly exposing their banking information.
Although Facebook could not be reached for comment, their mission statement—“Give people the power to share and make the world more open and connected”—provides some insight into their intentions with the new initiative. Facebook has already begun clearing the way for the launch of their new e-currency by announcing the August 1st termination of Facebook’s Gift Shop, where users could purchase iconic “gifts” for one another’s pages with “gift credits”.
Also, despite rumored arguments over the 30 percent payout for all Facebook credit transactions, CEO Mark Zuckerberg and company have signed a five-year strategic relationship with the social gaming giant Zynga, creator of Facebook hits Farmville and Mafia Wars, in which Facebook credits will no doubt play an increasingly larger role. Facebook’s virtual currency ambitions might run into some trouble, however, if the credits prove to be vulnerable to manipulation by hackers and to Facebook’s notoriously disorganized and open network.
In order to achieve the massive ecommerce revolution Facebook is capable of, they will have to rebrand themselves as a legitimate source of privacy protection and an organization committed to customer service excellence. Achieving this will be an important step in securing the business of skeptical Internet users and winning over those who resist the “Facebook craze” as a matter of principle.
Learn more about Facebook credits.