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7-Eleven Gets Game as Pay Window for Virtual Goods

By Feb 09, 2010

In the latest initiative in its campaign to become a one-stop shop for online gamers, 7-Eleven will partner with alternative payment start-up Kwedit to let gamers buy virtual goods within their games and then pay for those goods later at participating 7-Eleven stores.

The new service lets users—many of them teens or minors without credit or debit cards or other players who prefer to pay cash for their digital content—to open accounts with Kwedit Inc. They can then buy virtual goods in online games such as FarmVille and FooPets. They can simply print out a paper invoice containing a barcode and bring it to a 7-Eleven store, where it will be scanned and payment accepted.

“We’re an existing destination for pre-paid services with our sizeable business in cards for wireless and online gaming,” Raja Doddala, category manager for new business development at 7-Eleven, said. “This new platform fits right in with our strategy in the pre-paid services gaming services sector, serving the ‘unbanked’. Our strategy is to provide our customers with choices for their payment, whether online or offline.”

The popularity of online and social network games such as FarmVille has led to a boom in payments for digital tractors, virtual pet accessories and other goods that can be used or worn by players’ avatars in the game world. Those payments may reach a very real $1.6 billion this year in the U.S. alone and could hit $3.6 billion by 2013, according to a forecast from ThinkEquity LLC.

Right now virtual payments are largely confined to those players who can charge them to plastic or persuade someone else to buy something for them. But companies such as Kwedit hope to open that virtual-goods market up to the people who might be most likely to spend hard cash for fictional goods: gamers in their teen years and younger.

Kwedit lets players obtain virtual goods in exchange for a promise to pay for them later, either through the mail or at a brick and mortar outlet such as the 5,800 participating 7-Elevens in the U.S. Registrants are given an initial Kwedit score and a Kwedit limit, a spending limit set by the game publishers working with the payment company and influenced by users’ scores. Players can start buying virtual goods right away. If they fail to pay for those goods, that Kwedit rating declines and is eventually turned off. But since no actual goods have changed hands, Kwedit doesn’t risk anything by extending credit to pay for them.

And since its operators are only accepting payments for goods sold elsewhere, 7-Eleven runs no risk either, Doddala points out. In fact, the chain will eventually benefit not only from an additional driver for store traffic, but from the potential to add promotional offers and ads that shoppers can use while in the stores.

In December 2009, 7-Eleven announced that its in-store sale of prepaid game cards had doubled in the previous year. As a result, the Dallas-based convenience chain said it would double the selection of cards it stocks in its standing inventory for virtual goods, downloadable console game titles, and social network games. At the time the chain carried prepaid cards for 30 game brands.

“We intend to go after this market with physical product, virtual product and branded promotions,” Doddala said. “A Slurpee customer is more than four times as likely as the average American to be a gamer. Our customers are into all kinds of gaming—social gaming, console gaming and online gaming—so you’ll see a lot of promotions tied to that segment.”

Kwedit has said it will seek partnerships with other retailers, but so far its arrangement with 7-Eleven is the only live payment mechanism in the system, Doddala says.