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Comment by TomGullen | Hacker News Reader

Can someone explain to me why FB chose to use credits over just actual money balances? Is it psychologically designed to get people more willing to fritter them in the same way it's easier to blow chips in a casino than real cash? Is it a way to funnel multiple currencies into one global currency?

It just seems like an extra unnecessary convoluted layer to me. Having a credit balance over real money balance is unnerving for me and would mean I would never put too much money on at any one time, there's too much risk of something bad happening like quick devaluation. Also it would probably be far less liquid and harder to convert back to cash.

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Generally it's to avoid credit card charges that cuts into the margins of micro-transactions.

Whether the stored value is called "dollars" or "credits" would have no bearing on credit card charges.

It does when there are per transaction fees. 1x $10 has a lot less fees than 10x $1.

I believe they are saying keep the transactions the same (so 1x $10) but label the stored value as dollars instead of credits.

IIRC, most credit card fees are percentages, so the number of transactions wouldn't matter. I've never dealt directly with it, so I'm not 100% certain though.

Credit card fees are a base amount (which varies based in the auth method) plus a percentage of the sale. So for smaller transactions, the effective percentage is higher. Have you ever been to a store with a minimum purchase amount for credit cards? This is why.

Card fees depend on how big you are though. Large UK supermarkets have no minimum purchase amount for credit cards, because they have the clout to negotiate a better deal. Facebook is probably big enough to do the same.

Probably because FB is not a bank, and there are strict regulations in most countries for companies that store people's money like banks. Paypal is not a bank either, but I'd guess storing credits is still easier regulation-wise.

http://en.wikipedia.org/wiki/PayPal#Bank_status

>Can someone explain to me why FB chose to use credits over just actual money balances?

Think of it like the anti-bitcoin.

Kids.

They don't have credit cards but are now able to make in app purchases.

I thought kids weren't allowed on facebook?

Soon that won't be the case: http://online.wsj.com/article_email/SB1000142405270230350640....

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