ePayments Week: Tapping our hunger for Facebook Credits

Shoppers choose virtual currency, AmEx gets geolocation, and Isis plans for an NFC future.

Here’s what caught my attention in the payment space this week.

IFeelGoods wants to help you get your Facebook Credit fix

IFeelGoodsThe winner of the Startup Showcase at the Web 2.0 Expo in San Francisco last week wants to make a business based, in part, on their understanding that people want Facebook Credits but don’t want to pay for them. IFeelGoods, which describes itself as a virtual goods platform, helps companies offer Facebook Credits as incentives for trying or buying.

Scott Silverman, co-founder and VP of marketing at IFeelGoods, says the offer is enticing because, like shipping, virtual currency is something that people want but don’t necessarily feel is worth paying for. “You look at the demographics of people who are playing [social games on Facebook],” Silverman said in a phone interview, “and it’s people who are controlling household spending.” These social gamers start playing free games and “they get wrapped up in it, they want to advance, but it’s uncomfortable for them to spend money [on Credits].” But if they can find a way to get those credits “off budget” as it were, they’ll go for it.

To test their theory, IFeelGoods ran an A/B test of ads on Facebook — ads targeting shoppers, not necessarily gamers. One ad offered $5 off a purchase at an Internet shoe retailer and an identical second ad offered 50 Facebook Credits, worth the same cash value. Silverman says the clickthrough rate was double on the ads that offered credits. Their theory: when presented with a chance to earn credits for doing something they would do anyway (buy shoes), gamers grab them.

These kinds of offers are sure to become widespread as Facebook finds more opportunities, beyond social games, for members to buy or rent things with Credits. Last month Facebook dipped a toe in the movie rental business in a deal with Warner Brothers that offered a stream of 2008’s “The Dark Knight” available for 30 credits ($3).

If you’re wondering how far this can go, read Venessa Miemis’ thoughtful piece, “The Bank of Facebook: Currency, Identity, and Reputation.” One of the interesting ideas in her essay comes from Kevin Kelly, who points out that currency evolves from community, and that by creating a community of more than 500 million, Facebook has laid the groundwork for a commercial explosion. As that happens, IFeelGoods wants to be at the forefront, handing out the coupons.

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American Express serves up mobile plays

A couple of announcements from American Express in recent weeks show that the number three credit card provider has been laying the groundwork for a major mobile push. In mid-March they demonstrated a new partnership with Foursquare that puts them at the forefront of geolocation commerce. AmEx cardholders attending SXSW were encouraged to link their card to their Foursquare accounts. Like all Foursquare users, they were sent special offers from nearby merchants. But when they checked into those offers, they were given an option to load their AmEx cards with the value of the deal, which they could redeem on checkout. It was an experiment, but one that combined two important trends in ways that many other companies have been trying to achieve: make an offer based on a person’s location, then make it easy (and a bit enticing) for them to redeem the offer using their mobile phones.

A week later AmEx announced Serve, a new debit-based payment service that (among other things) lets you send funds to other people — just like PayPal. As we reported a couple weeks ago, Visa announced partnerships to do the same. Both represent yet another move to nibble away at services that once-upon-a-time were offered only by banks.

The Street’s coverage of the new AmEx service said it had been in the works since January 2010 when AmEx paid $300 million for Revolution Money, the Steve-Case-backed “e-wallet” platform. To earn that money back, AmEx’s Serve will carry transaction fees that some users might find a little steep compared to comparable services: free for six months, but after that $0.30 to load the card, a 2.9% fee on transactions, and $2 for an ATM withdrawal. Membership has its privileges, but they don’t come cheap.

Isis plans a tap-and-pay transit trial

Isis, the joint venture between three (or maybe two?) telecoms, AT&T Mobility, Verizon Wireless, and T-Mobile, signed a deal to test a near-field
communications (NFC) payment service with the Utah Transit Authority next year. Katie Deatsch at Internet Retailer writes that the Salt Lake City pilot will let transit riders carrying Isis-enabled NFC chips (which aren’t in production yet) to tap and pay with their phones — something that subway riders in Chicago and Washington, D.C. can do today with chip-enabled cards. As we noted in our post on Isis in February, the consortium is aiming to get Isis chips into phones by spring 2012, so there’s plenty of time to get the hardware in place.

Welcome to the real world, Boku

BokuBoku, which offers direct billing on mobile phone bills for digital and virtual goods, has teamed up with Telefonica O2 in Germany to offer its direct-billing service for real-world goods. Subscribers will be able to pay for goods (ranging from about $0.13 to $42) by entering their mobile number during checkout. The system sends a quick text to the phone, and hitting “reply” confirms the purchase. The amount is added to the subscriber’s next mobile phone bill. It’s a big step out into the world of real goods for Boku, which earlier this year received a vote of confidence from investors to the tune of $25 million. Also significant: It’s a test of whether the mobile phone will work as a de facto credit and purchasing device for buyers who don’t have (or don’t choose to use) a credit card or bank account.

Got news?

News tips and suggestions are always welcome, so please send them along.

If you’re interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O’Reilly and PayPal.


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