First Meta and Meta Card
by Jessica Holyoke on 17/02/08 at 12:28 pm
Pay reward points instead of interest?
by Jessica Holyoke
Prior to the banking ban being put into place I had an opportunity to sit down with JP Mougin and Tyra Fierrens, co-founders of First Meta and Meta Card, the first in-world Credit Card.
They came up with the underlying idea behind First Meta a few years ago – to provide financial services for the then-emerging phenomena of virtual economies at the end of 2006 when they decided to focus their efforts on Second Life. Back when the idea was forming, MMOG worlds were the general focus, but nothing was viable for what the original plan was, which was to provide a full suite of real financial services for virtual economies.
In late 2006, they arranged a meeting with Cory Linden through a mutual friend, Thor Alexander, and talked about Second Life when Cory was able to come to Singapore. During that conversation, they realized that SL was the perfect environment for them to start in.
JP Moughin
They prepared for entry by setting up a real life company, hiring a management and technical team, rewrote their business plan, raised their first round of funding from investors, built their system and island and launched their first products at the end of July 2007.
Those products are Meta Card and Meta Savings. Meta Card is an in-world credit card, accepted at various merchants. Instead of paying with your Linden balance, a resident can pay with an attached card which bills them just as a credit card does. The advantage would be the same as charging an item in real life, one main payment per month instead of many tiny payments. Customer and Merchant reception are meeting their expectations and Meta Card applications are increasing at a higher rate.
Meta Savings as a banking entity still exists. After the Lindens reviewed First Meta’s business plan, instead of offering interest in Lindens, there are reward points for the average daily balance kept on account at Meta Savings. These reward points are awarded now instead of interest. Formerly, the interest was generated from the spread between their savings account interest and the interest they charge on the Meta Card.
Tyra Fierrens
Future financial product offerings for First Meta involve commercial credit, equity financing, M&A advisory, and capital markets products. While virtual corporate entities suffer the same amount of risk as a virtual bank, those risks are known. Currently, First Meta has several risk management systems in place now which mirror RL risk management practices and they are developing their own risk management systems designed specifically for virtual economies using AI techniques.
In closing, JP Mougin had this to say:
“Our goal is to be the leading provider of financial services for virtual economies. We are a real company with 15 full-time staff and management team and an additional 10 solely in SL. We are well-funded by private investors. We will take whatever licensing or regulatory steps are necessary to continue to offer credible financial services in the virtual world. Our company registration documents and financial reporting are made publicly available in Singapore as First Meta Pte. Ltd. We have not experienced any runs on our savings accounts. Our Meta Card, which is our flagship product, is not affected by the new policy. Metacard only creates risk for us, not for our card holders or merchants. I think the net result of this new policy will be a strengthening of the virtual economy as it shakes out weaker or less credible players which will benefit all who participate in the virtual economy. We believe that a strong and credible financial services sector is one of the keys to the continued growth of the virtual economy. We want to provide some of that strength and credibility.”
dandellion Kimban
Feb 17th, 2008
WOW, this is fresh.
Cai Pirinha
Feb 17th, 2008
First Meta … aren’t these the guys that won the “Most Retarded SL Business Model of the Year” award?
I’ve hardly ever seen such a ridicous and stupid idea.
d3adlyc0d3c
Feb 17th, 2008
Banking ban does not restrict them as long as they are not offering interest,etc,etc….they can operate freely if they don’t offer interest.
Karl Reisman
Feb 17th, 2008
This actualy makes sense. So this would follow the American Express Model where one charges a months worth of expenses, and then pays the entire bill at theend of the month? Or is it like a Debit card, where you fill it with lindens and youspend until empty?
This could be good for people wanting to purchase big ticket items.
Karl
Razrcut Brooks
Feb 17th, 2008
I agree Karl, I wish the article would have given some specifics other than “one monthly expense versus many tiny expenses.” It sounds like a secured credit card or debit card. However, if its truly like a credit card, do they check one’s real life credit score and extend a line of credit? Do avatars have to divulge our sensitive personal and financial info to this Singapore bank?
Still an interesting article and worth checking into in-world. I could see how a person with multiple businesses and or avatars could use such a service to separate and track expenses and incomes by having a “credit card” for each business.
Blak Hax
Feb 17th, 2008
Im guessing it runs on the mastercard maestro system or the visa electron system. I think chances are very good LL will ban this regardless of their rules after a few complaints from IRS or some other agency stateside due to the risk it could be used for laundering and fairly anonymous international transactions.
Either way though, im surprised its taken this long to offer such a product in LL, ChingChong Chung bought the rights run the exact same kind of banking operation in Entopia.
anonymous
Feb 17th, 2008
Wow this is retarded as shit.
The credit system itself IRL is a really dumb idea, a legalized scam.
Why bother doing it in SL? Not so much a dumb idea for the people who work it, but for the idiots that buy into it.
It’s why the economy is falling apart in the US right now. People buying things on borrowed money, losing their homes, etc.
Tyra’s pic scares me.
JustMe
Feb 17th, 2008
Credit Cards work in RL because of the value added … both a way to defer payments and for the statements/transaction reports. In SL, the credit card model doesn’t make much sense.
1. Why do you need to defer payment for microtransaction? Let’s face it , most Linden dollar transactions are $L 500 or below … pretty much the cost of a loaf of bread and not even the cost of a beer at a bar.
2. There’s an existing transaction history report via the SL webpage already.
Prokofy Neva
Feb 17th, 2008
What’s operative here is that nowhere does it say that this company got a banking license in RL, and passed muster with LL’s demand for a banking license.
Instead, there is journalistic shorthand from the non-lawyer-turned-virtual-economist Jessica saying “LL reviewed their business plan” and they “met with Cory Linden”. Gosh, where do I sign up to get a meeting with a Linden and a review of my business plan?!
There’s another way to have “just one charge on my credit card” were I to desire it: buy a bunch of Lindens at the start of the month and keep them in…my account on my avatar lol. I’ll get one line-item at the end of the month on my regular credit/debit card.
There’s also the empty vow “to take whatever regulatory steps are necessary” which no one can check, and which covers up the fact that…they don’t have a license *now*.
Do you need a license if you don’t offer interest? Well, I guess not, but gosh, isn’t some regulatory agency likely to ask at some point what right this entity has to come and take everybody’s money and hold it? Because…while the Lindens don’t allow you to offer interest, what’s to stop you from taking the float from everyone’s money and putting it in PayPal after cashing out and earning interest there? Intending to make it instantly available, of course, if you get some sort of demand for withdrawals.
All you have to do to get a grip on how bad a business idea this is, is to look at the economic statistics page. There are only 360,000 people who spend more than $1 a month. A good number, a real number, a growing number, but…not a barn-stormer.
Then…look at that same very steep pyramid to see how many spend more than $20,000 — is it 2000 people or something? I mean, it’s hard to imagine that you could make a banking service without interest, assuming you even captured the entire market, of 2,000 people spend $50 or $100. How could you possibly pay payroll for 15 people here???
Jim Schack
Feb 18th, 2008
Instead, there is journalistic shorthand from the non-lawyer-turned-virtual-economist Jessica saying “LL reviewed their business plan” and they “met with Cory Linden”. Gosh, where do I sign up to get a meeting with a Linden and a review of my business plan?!
well when renting shitty houses on the mainland becomes against TOS and you do things differently to avoid breaking the rules, then maybe they’ll do it to you too. But honestly the way you conducted yourself at the Stanford Metaverse meeting yesterday, isn’t it any wonder why no one wants to chat with you?
Artemis Fate
Feb 18th, 2008
I just think it’s hilarious when people try to bring in those, as Anonymous put it, legalized scams from RL, into SL and try to pass it off like it’s the best new thing that’ll revolutionize how you do things in Second Life.
Why in gods name would I want a Credit Card in Second Life? The only reason I can think of to even have one in Real Life is that there are some things that you just can’t afford to buy in one sitting like a house or a car, or so that I don’t have to carry my cash around with me all the time (which a Debit Card works fine for). But, in SL you always carry your cash around with you very conveniently and safely, and there’s really not much of anything in SL that can’t easily be bought in one sitting.
Not only that, but this thing won’t even work everywhere. Only other merchants who are dumb enough to get involved with this scam (though, I suppose how dumb they are depends on which side of the scam they’re on), so not only does it really do nothing for you, what it does do it doesn’t even do well.
If this plan actually goes through and starts running (is it running now? I don’t know), here’s my 10 dollar bet that by the end of the year, there’ll be a story with a headline like:
“Meta Card users defrauded for millions of L$, JP Moughin and Tyra Fierrens nowhere to be found”
Darien Caldwell
Feb 18th, 2008
Yes, it’s running. And yes, it makes no real sense. So you buy Lindens with your RL card, incur fees, then put that Linden into this SL card, and incur more fees. Why get double fees? Just keep the L in your account.
ichiro Kiama
Feb 22nd, 2008
It amuses me to see people calling something a scam when they dont understand it. Not everyone may agree with First Meta’s business model, or the concept of credit cards in general, but people borrow money from them, so they carry most of the risk, not the citizens of Second Life. Several other groups offer similar services, from gift cards (another form of credit), or debit accounts (SLX), each with their own benefits (and risks).
First Meta provides value in many other ways too, from Second Life events, tools for vendors, a community, and sales promotions. Using and participating is completely optional, but many people agree with it and find it useful.
first meta victim
Oct 19th, 2010
Full blown scam now – http://help.firstmeta.com/discussions for some of the help requests for the newest first meta victims! you can deposit lindens, but not transfer or withdraw them. No answer from support or in world. How the hell did they get an API agreement with LL? One person on there bought IMVu credits and was banned because first meta credits are will get you banned. the list of scammed people is growing daily……..