What Payments Professionals Can Learn from FarmVille

No, we’re not talking about how to grow a great virtual blueberry patch but how software development platforms can drive innovation.

David S. Evans (Founder, Market Platform Dynamics) kicked off a panel discussion on the new payment platforms for innovation.

FarmVille is a virtual agricultural community housed inside Facebook. Evans explained that the game’s location within Facebook is in many ways a win-win-win situation (for Facebook, FarmVille creator Zynga, and the FarmVille players themselves). FarmVille gets access to Facebook’s audience of 500+ million users. Facebook gets a big chunk of revenue from ads on FarmVille pages and reaps the benefits of Zynga driving users to the site. And users get to play FarmVille without having to leave Facebook, a platform they already know and use.

(But is the FarmVille/Facebook winning streak coming to an end? Earlier this year, there was a payment feud down on the Farm(ville) over the method gamers used to buy items for their virtual farms on Facebook. Click here to read the full story.)

Still, Evans stressed that software platforms can drive explosive growth, citing the iPhone and its application store as an example. MasterCard, PayPal, and Visa are among the payments companies that have opened their platforms to developers, which Evans believes gets others to leverage the companies’ tools for innovation.

According to Evans, open software platforms can create a “virtuous cycle” in which the addition of new applications draws new users, which thus encourages the creation of more apps, which thus lures more users, and so on.

“The difficult thing is how you ignite them,” said Evans with regards to starting a two-sided payments venture. “One side usually gets a really good deal in order to stimulate demand on the other side.”

Evans noted that a key challenge is determining the extent to which the platform should be open to developers. While it should be easy for developers to write applications, companies do not want to turn partners in innovation into future competitors.


PYMNTS.com Blog Entries from the Innovation Institute

  1. LIVE: The [Payments] Innovation Institute
  2. David S. Evans: Why the Time Is Right for Innovation (and Cash Is Not Dead) (9 a.m.)
  3. No Need to Give a Eulogy for Venture Capital (10 a.m.)
  4. There’s Two Sides to Every [Payments Platform] Story (11:30 a.m.)
  5. The Key to Igniting and Launching Mobile Payments Platforms (12:30 p.m.)
  6. Fed’s Proposal for Interchange Rates to Be Announced Within a Few Weeks (2:30 p.m.)
  7. What Payments Professionals Can Learn from FarmVille (4 p.m.)
  8. Driving Network Effects with Platforms (4:30 p.m.)
  9. What Is The Next Great Payment App That Has Yet To Be Created? (5 p.m.)