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How Facebook Credits Work


You can use a credit card or PayPal to purchase Facebook Credits -- or, use your mobile number and charge them to your bill.
You can use a credit card or PayPal to purchase Facebook Credits -- or, use your mobile number and charge them to your bill.
Screencap by HowStuffWorks

Your "FarmVille" crops are healthy, and you routinely turn a profit in "Café World." You're exactly the person that the Facebook Credits system was designed for. But even if you're not rolling in a heap of Farm Cash, you might be surprised to find out how much money is actually changing hands on Facebook.

As part of Facebook's $5 billion initial product offering (IPO) in early 2012, the company released a lot of numbers about their revenue and usage stats which the public had never seen before. Since the goal of any IPO is to encourage people to invest in the company's shares, most of the language and data were about the ways the company is creating and improving revenue. This might have surprised some people, since the social network is free to users. However, $557 million dollars, or about 15 percent of Facebook's profits, came from payments and fees in 2011.

While that first report focused on the nearly $1.5 billion paid out to software developers through Facebook Payments -- a means through which users could give money directly to creators for the applications and games they participated in -- in early 2012, the conversation moved to the relatively new Facebook Credits system, which enables users to pay for virtual goods and services via a commerce system within Facebook itself. According to Facebook, in 2011, 15 million users -- which is still less than 2 percent of the whole community! -- were conducting transactions with Credits.

The program originally rolled out in May 2009, went through beta testing in February of 2010 and became official in January of 2011. By July of that year, Credits were the only form of payment available for Facebook games, and it was understood that soon it would become the standard for non-gaming applications as well. As a virtual currency, it's a way for Facebook to take a cut -- a cut of 30 percent, as of 2012 -- for administrating the purchase and use of developer goods and services on the Facebook platform.