Picture: Co-founders of First Meta, Douglas Abrams and Aileen Sim, in Second Life.

March 2008: A second life can be expensive to maintain, even if it is virtual in nature. You need real dollars to be converted to virtual money to pay for those fancy properties, flying cars, and exotic fashion goods, for your avatar.

And, as in real life, you may not always have ready cash. But donт€™t fret. You can use a credit card from First Meta, a Singapore-based provider of financial services in virtual worlds.

In July last year, the company launched MetaCard, a credit card denominated in Linden dollars (L$), the virtual currency used in Second Life. Currently, no one else is providing such credit facility to the avatars or residents of virtual worlds.

In Second Life, your avatar uses only L$ which you buy at Secondlife.comт€™s LindeX exchange. Depending on the exchange rate for the day, one US dollar is worth between L$250 and L$270.

Just like any money-changer, Linden Labs which operates Second Life, earns about US$5 million a year from the difference it makes when you buy its L$ and when you sell back L$ to the company.

Three kinds of credit cards

First Meta offers three kinds of MetaCard: Standard, Gold and Corporate. The credit limit for the Standard card is L$5,000 (about US$20) a month, and L$10,000 (about US$40) for the Gold card. The Corporate card is issued to merchants supporting the MetaCard scheme. Customers can also apply for an increase in their credit limits.

The market looks good for First Meta because there are more than 12 million Second Life residents to tap.

Founded in February 2007, First Meta intends to be a leading provider of financial services in all virtual worlds, says CEO Douglas Abrams. "First Meta will be like the Citibank of the virtual world in 3-5 years time," he adds.

Douglas thinks that by mid-2008, more services like mortgages and loans will be provided for business and there will be more emphasis on commercial banking. His firm is exploring opportunities in other virtual worlds that focus specifically on Asia, such as the Chinese virtual world, HiPiHi.

Pioneer in innovative services

First Meta has pioneered a number of innovative financial services for virtual economies, Its customers and merchants, for instance, would soon be able to sell L$ through its portal. MetaCard holders can also buy in-world items like wallpapers, ringtones and games for their mobile phones from thecellcity.com, the first merchant in the in-world to accept the MetaCard for financial transactions.

First Meta will also offer advisory and financial services to companies which are interested in promoting their in-world goods and services or to establish their market presence in the virtual worlds.

Within seven months from the MetaCard initial launch in end-July, 2007, First Meta has recruited more than 900 card holders and over 500 merchants offering more than 20,000 virtual products. This compared well with a mere 100 cardholders and 140 merchants in the initial launch phase in August and September 2007. Douglas expects by mid-2008 to have 2,500 cardholders and 800 merchants supporting the MetaCard, and he projects revenue for 2008 from $2-3 million.

The key to the businessт€™s survival and growth is probably being diligent in risk management and having a sustainable business model, he says.

Real business risk in virtual investments

Ginko Financial, a virtual investment bank in Second Life, collapsed in August. The bank was unable to repay approximately 200,000,000 Lindens (US$750,000) to Second Life residents who had invested their money with the bank over the course of its three and a half years of existence.

This and the barrage of complaints received regarding several in-world "banks" defaulting on their promises of high interest rates led to the subsequent implementation of a new policy in January 2008 regarding the regulation of in-world banks by Linden Labs.

"We foresee that there will be an increase in regulation in virtual world economies and banking systems and we welcome it," says Douglas. "And if there is a requirement we will be proactive in applying for a licence with the Monetary Authority of Singapore."

First Meta was a "Red Herring 100 Asia" award winner for 2007, and a finalist for the Global Awards. It employs 25 people and pays 10 of them L$ via their avatars in Second Life.

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