This story was written by Tameka Kee.
We’ve recently seen an influx of fundings and acquisitions in the online-payment space—particularly related to social gaming—and with good reason. As more people get comfortable with the idea of paying for virtual goods or other merchandise on their social networks, there’s a definite opportunity for a third-party to start making money off those millions of micro-transactions by becoming the “go-to” payment platform.
The latest startup trying to get a piece of the action is PlaySpan, which acquired micro-payment provider Spare Change in April. Now PlaySpan has launched the Spare Change Ultimate Payment Wall, which lets game and app developers integrate support for over 50 payment options—including pre-paid game cards that get sold in grocery stores—into their content. The game-card support is a key differentiator, since it means that developers can target younger users without them needing to ask for their parents’ credit cards.
Still, the competition is already fierce. PayPal, for example, is trying to extend its dominance to the social networking/apps space with PayPal X, a new platform that third-party developers will be able to plug right into their apps. Smaller firms like Super Rewards and PlaySpan may have head starts, but PayPal has over a decade of trust established with millions of users, which will be hard for less-known brands to overcome if PayPal X gains traction.
Then there’s Facebook itself, which has been testing an in-house virtual currency that would work across the many apps and games that are profiting from is massive user base. VentureBeat suggests that Facebook app developers could clear over $500 million in revenue this year from a combination of user transactions and ads; Facebook investor Marc Andreessen predicted that the network would bring in roughly the same amount (or a little more) on its own—but if it “pushed the throttle forward” on monetization, it could bring in over $1 billion.
Working out some way to charge developers that are making money from user transactions (either by a straight rev-share or a monthly “platform fee”) could definitely be one way for Facebook to improve monetization.
By Tameka Kee