After the launch of Facebook Connect last year, several websites have started using this platform, to enable their users to log in via Facebook and connect and share information with each other at various levels. In an effort to monetise this service, Facebook is planning to create a virtual currency.
If this virtual currency is combined with Facebook, it could open up the possibility of a new business model which would have a large scope. If this happens, the internet would cease to be dependent on credit cards for the various transactions occuring.
Facebook has already got some experience with virtual currency, thanks to their app Acebucks. However this was not an official Facebook currency, and hence could not be used for buying and selling of items on the net.
If they do launch an official currency, it could be used across any Facebook application for financial transactions.
If a user buys the currency from Facebook, he does not need to use his credit card, every time he makes an online purchase. The purchase can be made at a single click of the mouse, thus making it easier to conduct various online transactions. The nominal transaction fees being generated from each such purchase would end up providing good revenue to Facebook.
If this currency is then combined with Facebook Connect, the scope would grow manifold. It would then be possible for users to connect to any site they desire, make their purchases their and the money could simply be deducted from the facebook account f the user. Donations can also be made in this manner.
Paypal, which has a similar format, has not really turned into a very big success so far. One of PayPal’s co-founders, Peter Thiel, had expected PayPal to replace the dollar and be able to move money around the globe easily.
Peter Thiel happens to be on the board of Facebook and his experience in this field, could help Facebook to succeed where PayPal has failed.
Gareth Davis of Facebook said at GamesBeat conference in San Francisco, that Facebook was considering this step, but it would have to be done carefully.
Obviously, the most important thing to remember here is that Facebook will have to take appropriate steps to guard against frauds and scams.
On the other hand this currency would allow millions of users to buy items online, without giving out their credit card information.
Users can make a one-click purchase, of the currency, in multiples of $10 or 20 and can then spend even as low as 25 cents at a time. A single credit card transaction for such small amounts is not viable as the developer will have to spend more money than he would earn out of such a transaction.