What Value Widgets?

ReadWrite Web continues to questions the ability of facebook to monetize its platform. The general potential of facebook and other social networks is an issue I've blogged about here and here. It has not stopped the venture community from continuing to pour money in, including a $20 million investment in meebo at a $200 million valuation most recently.

RWW notes that most of the successful facebook applications are strictly fun ways to communicate with your friends - I totally just superPoked your demon. Applications that actually have utility tend to not have the viral component that many of these applications which just reach out and touch/invite facebook friends. Further, it remains difficult to engage users while on facebook. Further, for applications that are related to one's personal activities - calendars, reminders, blog readers - it is strains reason to assume that people will bother their friends with invitations.

None of this has stopped folks like Adonomics from continuing to espouse the limitless earning potential of facebook applications. According to a February blog post everything on the web will be remade for facebook which will create a marketplace and incomes for developers of facebook applications along the lines of eBay for Power Sellers. However, to date, the income from the widgets has come only through advertising with networks like Gigya and WidgetBucks.

These networks may extract the ad rents from facebook, assuming they can produce more success than ads on the network itself. My personal experiment with ~15 different ads failed to yield a click-through rate above 0.04%, at which point the company stops serving your ad until you increase the Cost-per-Click bid to something in the Google levels - read $1.50. The site does have the ability to deliver impressions, but the value of that given its users' unwillingness to engage calls into question its ability to drive value. (Companies can use larger images, but to do so, you need a $50,000 guaranteed budget, and who knows whether that is on an impression or click basis.

Online ads certainly continue to garner more of the discretionary funds of large advertisers. The battle for the clicks that make these ads useful will continue to go on between the multiple players providing each piece of a web page.

Widget Payments

Mpayy continues to offer its secure payments services through a syndicated widget that can also be found on facebook. Mpayy will relaunch its widget with configurable logos, skins and payment fields on May 18th. Stay tuned.

Electronic Payments Pricing Compared

Last week I presented the capabilities matrix that juxtaposed Mpayy with the other payment processing systems available for plug-in to any eCommerce website and for use to conduct payment processing for online sales that don't involve a web shopping cart.

Today, we present a comparison of the pricing for each of the various channels offered by each of the systems.



Mpayy wins in all categories on the basis of pricing, and was designed to do so. Mpayy is a multi-sided payments network of buyers and multiple types of sellers. There's a great article in the Harvard Business Review that indicates it is important to subsidize one-side of the network. Mpayy does this by providing the 1% Cash Back on purchase amounts over $50, 100 free Person-to-Person Transfers/month, and providing for $0 overdraft fees when users' checking accounts are empty.

On the Mobile Commerce side, Mpayy is well-positioned to take advantage of any growth in this new type of sale. PayPal does have a model, and is working with companies like Mporia which hosts mobile commerce websites for companies like Buy.com. As you can see, PayPal forces those merchants to pay through the nose for this unique capability, though those prices will come down as adoption of Mpayy grows.

PayPal rates are closer to those of Mpayy, though online selling merchants are increasingly in opposition to eBay/PayPal, which is restricting payments to sellers for up to 21 days for any transaction eBay deems questionable. Further, there is some evidence that sellers with a spotty track record and new sellers are being forced to use PayPal. Large retailers are reluctant to adopt PayPal for two reasons: i) eBay clears billions of dollars of merchandise competing with the retailers and providing eBay with a competitive advantage by possessing their data; and ii) "gray market" goods that move through eBay will undermine the retailers' own goods.

Google Checkout offers $0.20 + 2.00% for Internet Point of Sale transactions. However, Google only accepts credit cards, and increases indirect costs through the onus of integrating to their API's, including providing complete information on everything in a user's shopping cart rather than just clearing the transaction. While we have no direct evidence, this would suggest that Google is taking a loss on every transaction in light of credit card costs to merchants being so high. Further, our discussions with the largest retailers indicate it is unlikely Google Checkout will receive significant adoption among "MegaRetailer.coms" because they know the value of their data and don't want to give Google all of that information.

Revolution Money is on here because they are currently offering $25 account opening bonuses and claiming no fees. As discussed on Friday, Revolution Money does not have a merchant model, and funds sent through it are not guaranteed. Further, they require a pre-funding step rather than just treating their account as a pass-through account. Revolution Money is seeking a lead list for its credit cards, and they do have plenty of other fees built into the system should anyone run afoul.

Electronic Payment Processing Systems Compared

The following is a side-by-side comparison of Mpayy with its electronic payments processing competitors.



It is certainly possible to feel this is biased towards Mpayy, as is my tendency. However, this highlights design decisions that were made in constructing the application.

For consumers, Mpayy created a multi-channel application (online, mobile, social networking, and internet retail partner sites). Further, consistently, Cash Back is the highest ranked reward by consumers. Mpayy provides 1% Cash Back on Purchase amounts over $50, and will provide soft dollar rewards that can be used as cash based on balances stored in the application. That is coming in the next few months.

For Merchants, the primary concerns were the price and security. The MOST expensive Mpayy will be is $0.20 + 2.00%. Google Checkout is offering that price, and we will certainly go below it with the right internet retailer partner or for PeSA and ECMTA members should they approve us. However, Mpayy also takes 100% of the fraud liability, not so with Google Checkout, and provides merchants with guaranteed payments, which GC does not.

On site integration, PayPal and Google Checkout provide relatively extensive API's to integrate to, and Google Checkout requires merchants to maintain their SKU's within the application, which is not practical as the size of the merchant grows. Mpayy's simple session transfer can be developed to within hours, and the AJAX Checkout window will be packaged up and plug and play when it launches as well.