Facebook Updates Payment System

Social media giant Facebook

announced Wednesday that it has added new payment functionality, granting developers the option to collect monthly subscription fees for third-party applications. In a company blog post, Facebook said that, "Since we introduced Credits in 2009, most games on Facebook have implemented their own virtual currencies, reducing the need for a platform-wide virtual currency. As a result, we are updating our payments product to support pricing in local currency

British pound and Japanese yen) instead of Credits." The update is due to go live in July, and it will give developers the ability to set monthly transaction fees for features and application use. As a result, developers will be able to offer options like premium access. Earlier in June, Facebook added a mobile app store to its service. In the app store, users can discover new apps through by viewing apps "liked" by their Facebook friends. Currently, there are over 600 apps integrated into the store. With this announcement, Facebook may be hoping to make the app store more attractive to developers. By switching to a user's local currency, individual apps could become more attractive to purchase. "By supporting pricing in local currency, we hope to simplify the purchase experience, give you more flexibility, and make it easier to reach a global audience of Facebook users who want a way to pay for your apps and games in their local currency," said Facebook. "With local pricing, you will be able to set more granular and consistent prices for non-US users and price the same item differently on a market-by-market basis." Since going public, Facebook shares have performed poorly. Many market commentators have speculated that doubts over Facebook's revenue generation model have led to poor returns. With this step, Facebook has created yet another venue for potential revenue generation. To ease any transition-related concerns, Facebook made it clear that is will automatically convert credits owned by users into their own local currency, and that games and apps will be required to use local currency by the end of 2012. "This transition will be seamless for your users on Facebook," Facebook said. "Already, most people see items priced in their local currency in the payments flow. Additionally, we'll convert any Credit balances into the equivalent amount of value in users' local currency, which they can spend on in-app items in the same way they do today. People can still redeem gift cards and store unused balances in their account." On Wednesday, Facebook was trading near $31.60, down roughly 0.7% on the session.