Facebook's Virtual Currency and the Exchange Rates

By Eric Eldon
Inside Facebook
Monday, January 25, 2010

http://www.insidefacebook.com/2010/01/25/as-facebook-gears-up-for-credits-heres-the-exchange-rates-for-the-15-supported-currencies/

Facebook has slowly introduced its virtual currency, Credits, to third parties over the last few years. But it has been planning to make Credits a more central part of its platform for third-party developers, and we’ve been hearing that a bigger launch is planned soon.
So here’s a look at how much Credits currently cost Facebook users around the world. A lot more people are going to care about these numbers if and when Credits becomes a way to buy virtual goods in Facebook apps and games.
The table you see shows how each of the 15 currencies that Facebook supports currently converts to Credits. We convert to 10 Facebook Credits because that’s the lowest denomination available (you can’t just buy a single credit). We also compare the conversion to how each currency converts to the US dollar based on numbers from Yahoo Finance — clearly, Facebook is benchmarking the value of Credits on the dollar for the time being, as the two sets of numbers almost exactly line up. The difference is likely due to Facebok updating the dollar conversion slightly later than real-world market changes.
Despite the dollar parity, Facebook has been making a few moves to make Credits more distinct. The virtual currency appeared in its earliest form as a means to by virtual gifts in the company’s Gift Shop, years ago — it only moved from US Dollars to Credits in November of 2008. Then, last May, it adjusted the exchange rate from 100 Credits per $1 to 10 Credits per $1. In June, it followed this move by introducing the 14 additional currencies you see listed in the table.
We’ll be watching to see how Facebook handles Credits pricing. In order to make virtual gifts more affordable to more of its users, the company may choose to unpeg Credits from the Dollar, and allow users to purchase Credits for a range of prices aimed at local (and often poorer) markets. This is important because around 70% of Facebook’s more than 350 million monthly active users are outside of the US, with many of them in developing countries.
The Credits Timeline
The more users Facebook can get paying at all for Credits, the more money it can make. In May, the company also began letting third-parties sell goods in the virtual shop using Credits. Facebook has long planned to take an Apple-style 30% cut from transactions that go through Credits, as we first reported in May and then in November.
Facebook has been planning some sort of major launch with big developers since last fall; at one point, we heard that the company was aiming for a launch in time for Christmas virtual good sales. Happy Islands, a social game by CrowdStar, launched last month using Credits as the sole means for virtual goods purchases. This month, the company has already made a push to hire for a new payments operation team, tested a payments resolution interface, and released Credits in more apps.
Credits might squeeze out payment services providers who currently provide currency support and other features to developers. We’ve heard unconfirmed rumors that Facebook will offer incentives or regulations that favor Credits over third-party virtual currency systems.
Yet many developers themselves have told us that Credits could them make more money. The reasons are that users will have a more seamless interface for purchasing and spending the virtual currency, all using Facebook’s own brand.
For further reading:
"Facebook Credits - Part I: The Story So Far", Neil Vidyarthi, All Facebook, January 25, 2010
"Facebook Credits - Part II: What's Here and What's Next", Neil Vidyarthi, All Facebook, January 26, 2010
"Revealed! Facebook's Plan To Double Its Revenues", Nicholas Carlson, Silicon Alley Insider, January 25, 2010
"Developers Would Pay 'Whatever Cut Facebook Desires' For Payments Platform", Nicholas Carlson, Silicon Alley Insider, January 12, 2010
"A Running Summary of Facebook’s Virtual Currency Tests", Justin Smith, Inside Facebook, August 26, 2009