Financial Services Coming to Virtual Worlds

First Meta launched what they claim is the world’s first virtual credit card. The card allows members of Second Life to purchase virtual goods now and pay for them later, just like you would on a regular credit card.

The card itself comes with a monthly fee of L$300, which is waived if users charge more than L$500 per month. Interest is computed daily, just like a real-world credit card.

The launch of the card is an example of what I have thought for quite some time: offline financial products will increasingly trickle into the virtual world.

Second Life has already seen the creation of several stock markets, including the Metaverse Stock Exchange. In addition, a number of virtual and offline banks such as ING, BNP Paribas, and others have set up shop. Netbanker in an article from March 10, 2007 entitled Futuristic Friday: Banks in Second Life had this to say:

“we believe that full banking capabilities, including transactions, lending, currency exchange, will eventually be conducted in virtual communities such as Second Life.”

I tend to agree and the First Meta launch is another step in that direction. There are many hurdles that need to be overcome though before this will have the user base to really be significant. These include:

• The mass market adoption of virtual worlds. Despite the hype they are still really only used by a fringe group of users.
• The migration of normal online activity into virtual worlds – online shopping, online entertainment, etc.
• Financial regulation and control. Where there is money there are scammers. Ensuring that online financial institutions are regulated will be extremely important.

I also believe that a start-up will probably have the best change of succeeding in this space. Most offline banks lack the online flexibility and expertise to succeed on a large scale in a virtual world.

It will be interesting to watch this develop.