Technology & Science

New online payment system takes cash for virtual goods

New startup company Kwedit Inc. is making it easier for users of free online games like Farmville who don't have credit or debit cards to pay for the virtual goods sold in such games using cash or third-party payments.

Kwedit targets users of free social games like Farmville

New startup company Kwedit Inc. is making it easier for users of free online games like Farmville who don't have credit or debit cards to pay for the virtual goods sold in such games using cash or third-party payments.

The California-based company on Thursday launched a payment system called Kwedit Direct that allows users in the U.S. to pay for their digital purchases after the fact by mailing in cash, paying the bill at a 7-Eleven store or getting a friend or family member to pay on their behalf through a social payment network called Pass the Duck.

The payment system is intended for so-called social games that are free to play but charge a small amount for extra features that are key components of the virtual worlds at the heart of the games. In Farmville, for example, which, with 73.8 million users daily, is the most popular game on Facebook, players can purchase virtual farm animals.

The Kwedit system is available on more than 100 websites so far, including FooPets and PuzzlePirates. Many such sites are popular with children, who don't own credit or debit cards.

But Kwedit CEO Danny Shader says that even among adults, 25 per cent of U.S. households don't have credit cards, and of the remaining 75 per cent, many prefer paying cash.

'Virtual credit system for the virtual world'

Users of the Kwedit system make what the company calls a Kwedit Promise, which allows them to play the game and pay for their virtual purchases later using one of the three Kwedit Direct methods of payment. (The retail option is so far only available at 5,800 7-Eleven stores in the U.S.)

The system works similarly to regular credit: users receive Kwedit Limits and Kwedit Scores and are rewarded for making good on their payments.

Conversely, if users don't keep their promise, they will be given a lower Kwedit Score, which will determine whether they can continue to play.

"[It's a] virtual credit system for the virtual world," said Shader, although he acknowledged there are people who will not follow through on their promises.

The company hopes to eventually offer its services in Canada.

According to InsideVirtualGoods.com, U.S. sales of virtual goods reached $1 billion US in 2009 and are projected to grow to $1.6 billion in 2010.