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Cashmore: Why I'm banking on Facebook

By Pete Cashmore, Special to CNN
Mashable CEO Pete Cashmore says Facebook is becoming a place to spend and transfer real money.
Mashable CEO Pete Cashmore says Facebook is becoming a place to spend and transfer real money.
  • Mashable's Pete Cashmore says Facebook is becoming a sort of bank
  • People can exchange money through online social network
  • New Facebook app called Buxter allows these transactions
  • People also can buy Facebook Credits for use on site

Editor's Note: Pete Cashmore is founder and CEO of Mashable, a popular blog about social media. He writes a weekly column about social networking and tech for

London, England (CNN) -- We already connect with friends on Facebook to share photos, videos, text updates and Web links, but might we also use the service to exchange money?

I'm willing to bet we will.

Buxter, a Facebook application that launched this week, tries to make that logical leap: Users add the app to their Facebook pages to send U.S. dollars or euros to friends.

The app, created by London-based payments provider ClickandBuy, enables payments of up to 50 euros, or $68. Sending and receiving money is free, but ClickandBuy charges a 1.9 percent withdrawal fee, with a minimum withdrawal of 2 euros, or $3.

Buxter is unlikely to take Facebook by storm: While handy for settling a dinner or drinks bill between friends, it would prove truly useful only if all of your Facebook connections were to join.

You're prompted to install the application when receiving a payment -- a strong incentive, for sure -- but building trust and a user base for a new payments application may prove an uphill struggle.

Facebook Credits

A more likely contender in this space: Facebook itself.

"Facebook Credits" can be bought with a credit card and are used to purchase virtual items within games like FarmVille. They can also be used to buy virtual gifts for friends.

The scheme had been characterized as a potential "PayPal killer," but last month the two companies announced a partnership that allows users to add to a Facebook Credits balance using a PayPal account.

Facebook Credits, unlike Buxter, will have no trouble becoming ubiquitous: FarmVille, one of the leading Facebook games, recently surpassed 80 million active players.

Facebook is taking Credits seriously. Last week, the company penned a blog post titled "Expanding Our Commitment to Facebook Credits," hinting at a wider rollout of the service.

A full launch of Facebook Credits could come in April at Facebook's F8 conference, reports CNET.

The mobile opportunity

If you imagine friends settling the dinner bill using Facebook credits the next morning, you're perhaps missing another major social networking trend: mobile.

ComScore reported this week that access to Facebook's mobile site increased 112 percent from January 2009 to January 2010. Given the near-ubiquity of Facebook, it can't be long until such small payments are made in real time on your phone.

Of course, we'll have many options for exchanging small sums of money over the Web -- we already do -- but Facebook holds a unique promise. The social network is a platform for sharing between friends, from Web links to photos, videos and even exchanging virtual gifts.

It's only logical that a venue for exchanging social currency will one day become a place to transfer real money, too.