Target Deal Misses the Main Point of Facebook Credits
School is back in session, so it is time for a little multiple-choice quiz:
Q: The most important aspect of Facebook’s deal to sell Facebook Credits gift cards in Target stores is:
a) That Facebook needs to tap brick-and-mortar retail stores to make real money;
b) That it indicates just how hot are gift cards;
c) That Target has scored a big branding win by aligning with cooler-than-cool Facebook;
d) That it shows that Facebook is going to rock online payments; or
e) None of the above.
(Correct answer: D.)
OK, so maybe you blew that question. It’s early in the school year, so we’ll give you another shot at a passing grade with this multiple-choice question:
Q: Facebook Credits are used to:
a) Spend money in Facebook games;
b) Possibly replace PayPal;
c) Eventually facilitate commerce on Facebook;
d) Help disaffected college dropouts qualify for an online bachelor of arts degree; or
e) All but D.
(Correct answer: definitely A; probably B and C; and certainly not D.)
What this little quiz is getting at is this: the news yesterday that consumers will have the opportunity to buy Facebook Credits gift cards in Target stores this holiday season obscures the real news, which is that Facebook Credits is set to crush online payments.
Facebook Credits is Facebook’s payments system and it is now used to buy virtual goods in nearly 150 Facebook games. At the beginning of the year but 14 games, including “Happy Aquarium,” used Facebook Credits.
And Facebook Credits are not just restricted to Facebook.com, as the Target deal intimates. Facebook Credits are mobile through Zong, a mobile payments startup. Most notably, Facebook Credits work in Zynga games, including FarmVille, after Zynga and Facebook signed a five-year deal last May.
Right now, Facebook Credits are restricted to playing the role of virtual currency for Facebook games, but I don’t see why it can’t morph into a full-fledged payments system. Facebook is already inching in that direction through TrialPay and Rock You, which allow for Facebook users to earn Credits in exchange for completing promotions.
And the engine for this transition deeper into payments could be the Target deal. Facebook gift cards will be available in values of $15, $25 and $50 at all of Target’s 1,750 retail stores, as well as at Target.com.
Just last month Facebook signed a similar deal with internet payment group MOL to sell Credits across its 500,000 outlets in South East Asia, Forbes reports.
Facebook invariably boils down to numbers, and they remain massive. Facebook says it has more than 500 million active users and that 50% of its active users log on to Facebook in any given day. Top that, PayPal.
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