1. Influx of Users with High Repeat Usage and Time on Site -
   this is true for many community-oriented sites, whether it's forums,
   social media sites, or MMO's – if a site doesn't have strong
   engagement, then it will never sell premium services and should stick
   with advertising
2. Creation of Premium Items and Services – this is where all
   the site focus generally takes place since it's fun to come up with
   cool virtual items, although I've blogged before about how it's more
   important to worry about STATUS, not GOODS- in any case, the site
   owners must focus heavily on creating services which users will pay for
   - social gaming service Zynga has some great examples of ways to
   monetize users.
3. Offer a Wide Range of Payment Options – this is the most underlooked part of the equation, but is crucial for
   community sites which appeal to US teenagers or anyone outside the US
   who is not credit card-centric – this is where aggregated payment
   services enter the equation.

Because the big social media sites can not seem to come up with a
shared electronic wallet solution (like logically using one from TwoFish
where I'm on the BoD), it means that every application provider or
individual site must come up with their own way to collect money from
users for premium solutions.  Since many of the users don't have credit
cards, or aren't comfortable putting them down, all big sites need to
provide a wide array of payment options to maximize potential revenue.

Most important payment options are:

• Credit Card – bulk of users, esp in US
• PayPal – bigger in US than overseas, but generally #2 after credit cards
• PrePaid Cards at Retail – can be really large, like for Maple Story MMO, but is low margin
• Premium SMS/Mobile – is often the largest non-US solution, but very expensive
• Cash In Mail – Gaia Online has 3 people opening envelopes of cash – is often overlooked
• Fill out Surveys – a newish offering which lets users provide information in return for currency
• CPA – e.g sign up for ringtones, and get virtual currency
• 50+ other solutions, especially outside the US – includes bank transfers, additional cards, etc.

At Meez, we offer
the first 5 solutions, and each one beyond credit cards has driven up
revenue by 5-10%, but it becomes a management nightmare to continue to
coordinate with each provider, as well as implement each additional API
solution.  That's where aggregated payment solutions come in.  With any
of the providers I first mentioned above, a social community site can
quickly offer a wide range of payment options with a much smaller
amount of work, and by paying only a 5-10% additional fee beyond the
core fees for each type of service.  This move generally drives up
revenue by 25%+, and opens up the site to a much wider range of users
who may be frustrated at their inability to pay for premium services.

At
a later time, the site can choose to do individual deals with
especially important providers, depending on how a sites' users tend to
choose. e.g. if a large percentage of users choose mobile payments,
then a site may want to cut a direct deal with a big SMS provider like
Zong, MobileCash, etc. to feature them and to cut out the middle man

With
alternative payment systems now proliferating along with the
monetization opportunities, some of these companies are doing tens of
millions of dollars in revenue after being in existence for just a
couple of years.  The competition is growing quickly, but so is the
emphasis on premium offerings, so it's one of the few growth areas in
the sector.  Where is PayPal or VISA in this opportunity?  The short
answer is nowhere after multiple failed efforts, but my guess is they
will end up purchasing the leaders in the space once it gets large
enough, just as PayPal recently did with Bill Me Later.  

Again,
if you have a popular social community site and you're not aggressively
monetizing it through premium services, you're leaving tons of money on
the table, and probably won't be with us in 2010 at the current trend
line, so definitely look at the payment services as a way to quickly
scale up your offerings.

This post previously appeared on Sean Ryan's SharkJumping and was cross-posted with permission.