As reported by American Banker, while Facebook is moving to phase out its Facebook Credits, Amazon announced the launch of Amazon Coins, a virtual currency for spending on its Kindle Fire tablet. The two currencies look a lot alike. Both are intended for buying digital items online, and both can be purchased in exchange for real-world currencies. Facebook said last year that it would eliminate Credits to instead allow developers of Facebook apps to price virtual items in real currencies.So why would Amazon.com move ahead with such a product when one of its rivals has just thrown in the towel? According to observers, Amazon has a marketplace that Facebook does not. Amazon has merchants and consumers that Facebook does not. Amazon also has a lot more experience in e-commerce. Facebook generated almost 16% of its revenue last year through payments, but it still makes most of its money from advertising. Amazon.com, by contrast, may has less experience cultivating an app ecosystem but is a pro at online commerce.
Digital currencies have had a rough road. with even widely known currencies like Bitcoin having trouble hitting the mainstream. Microsoft Points, used for purchasing games and other media on its Xbox 360, is one of the few digital currencies that works according to observers. Microsoft's system is comparable to a stored-value account, allowing consumers to purchase Microsoft Points on cards in stores the same way they would purchase a prepaid card.
The launch of Amazon Coins is slated for May, 2013. Read the American Banker article here.
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