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.

How to Use Facebook Credits

In 2012, Credits were worth 10 cents each (with a sliding bonus scale when you buy in bulk). They work just like arcade tokens. You can buy them on Facebook using credit cards, PayPal, gift cards, your mobile phone (the purchase will go to your wireless bill) or at various retail stores depending on what country you're in. Since Credits are virtual money purchased with real money, you keep them in a virtual wallet -- linked to your Facebook account.

Facebook maintains a long list of games and applications that take Credits. Some require Credits to play or use, but the majority simply use the Credits system for add-ons within the software. For example, a Farmville-type game might use Credits to purchase additional turns or rare animals, while more competitive games against other players could take Credits to give you offensive advantages. You can buy Credits both within a game or application by going to your payments tab.

Your purchases, account balance and payment methods are available for review under the payments tab in your accounts settings. Since younger people and those without credit cards can use other methods to purchase Credits, it's important for parents to monitor their kids' purchases. This is also one reason the site maintains purchasing limits, just in case something -- like an enthusiastic kid or a Credit-hogging hacker -- slips through the cracks. If you want to change your payment method, keep kids or others from using your Credits, or block certain payment methods from being used in your particular situation, those settings can also be accessed from the payments tab.

Questions and Other Areas of Concern

The payments tab in your Facebook account will give you information on your Credits balance and lets you update your payment and currency preferences.
The payments tab in your Facebook account will give you information on your Credits balance and lets you update your payment and currency preferences.
Screencap by HowStuffWorks

Since all game developers that integrate their products with Facebook now use the Credits system, your purchases will show up on your bank balance or card statement as being authorized by Facebook, regardless of the application you're making the purchase in. The first time you use Facebook Credits, you'll see a temporary payment for $1.01, which is a simple transaction used to verify your payment method. Once your financial information is validated as active, the charge is reversed. Keep in mind that server traffic may delay the immediate availability of in-game merchandise and/or payments showing up in your Credits account. If your account doesn't update four hours or more after your purchase, contact Facebook and -- if this applies -- the developer in question. They'll work to remedy the situation.

For those worried about transaction security, Facebook provides on-site information and customer service to help you understand how the payment system works. Remember, it's in Facebook's best interest to keep its users satisfied, which means keeping an up-to-date FAQ and Help section as well as responding to your needs in a timely way. On the other hand, as a consumer, it's up to you to monitor your account balance and usage, as you would your credit card or cell phone usage stats, to make sure nothing crazy is going on.

The bottom line is that Credits are an easy, smart way for Facebook to keep your experience with the site going -- the less time you spend surfing to other sites to make payments, the more likely it is that you'll keep playing that game or using that application, keeping your eyeballs firmly where they want them. In the end, it's your choice whether the fun you're having is worth the Credit -- and your responsibility to remember that, even at just 10 cents a pop, those things add up. As anybody who's gone through app addiction on their new phone -- which is probably all of us! -- can tell you, that's a lesson you really don't need to learn more than once.

Author's Note

Going into this article, I thought of Facebook Credits only in terms of the games and applications I'd been avoiding for years -- all those invitations from friends to discover news ways of wasting the time I was already wasting looking at high school pictures of exes and looking up old grade-school teachers. But I was fascinated to learn about the extent of the platform and the way Credits have become a new standard for Facebook: You can easily see a time not too far away where they could be used for more than just simple games and time-killers. Credits, whatever form they take, will pretty clearly soon be used in as many ways as the service itself finds to be helpful (and ubiquitous) in our online experience. For something with such widespread and varied use, an in-system currency begins to make a lot of sense.

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Sources

  • FAF Research. "Facebook's $100 Billion Valuation Could Be Cheap If This Change Happens". Seeking Alpha, Mar 2012. (Mar. 11, 2012) http://seekingalpha.com/article/427251-facebook-s-100-billion-valuation-could-be-cheap-if-this-change-happens
  • Protalinski, Emil. "15 Million Used Facebook Credits To Buy Virtual Goods In 2011." ZDNet.com, Mar 2012. (Mar. 11, 2012) http://www.zdnet.com/blog/facebook/15-million-used-facebook-credits-to-buy-virtual-goods-in-2011/10229
  • Ray, Bill. "Big Brother Refunds Facebook Credits After Vote Crash Blunder". The Register UK, Mar 2012. (Mar. 11, 2012)http://www.theregister.co.uk/2012/03/06/big_brother/