Just before Christmas 2007, Facebook’s J Morgenstern put out a call for developers interested in working with the platform to develop an in-platform payments solution.  Now it seems the project has been scrapped.

The original call required interested developers to sign a Non-Disclosure Agreement, and that may be part of the reason for so little being heard around the bloggosphere and wider internet generally.  Peter Thiel, one of the co-founders of PayPal was, at the time of the call, a primary backer and board-member of Facebook via his Founders Fund …

Original reasoning at the time of the call to developers cited that -

Transaction-based applications that use virtual currencies or kick users out to PayPal could soon start accepting payments from users directly in their applications.

A Platform payment system could also be a significant revenue generator for Facebook. While Facebook is not making money directly from application use (developers keep 100% of ad sales), developers would be happy to pay a commission for the service.

Now it seems the project has been shelved or scrapped entirely.  Justin Smith of the Inside Facebook blog posted on Dec 29th that, “one year later, Facebook has not developed the system, and some signs from the company point to the project being on hold altogether while it focuses on other priorities.”

He also revealed -

Facebook has apparently decided not to get in the middle of third party transactions, leaving merchant solutions to other payment processors. Developers can continue to choose between established providers like Paypal and new entrants like Spare Change and Zong.

When asked directly about the future of a Facebook Platform payments system this afternoon, a Facebook spokesperson said, “We’ve been excited by advertising and payments solutions provided by the market, and we currently do not have anything to share around a Facebook Payments system at this time.”

Justin followed his 29th Dec post with another on the 30th analysing why Facebook have deprioritised an on-platform payment solution.  Some of the commenters added extremely worthwhile reading and further analysis/commentary.

The decision and statements will be disappointing for social commerce solution providers, game developers, and virtual gifting companies. It is possible that for social network shopping applications, such as ShopIt, life will become easier with this decision.  They will be able to retain cross platform solutions without worrying about the need to build-in platform-proprietary payment options.

Whilst it is good news for Spare Change and Zong, it may in the long run, prove to be better news for online payment giants like PayPal, and micropayment services like Xcoin.

Ed