Facebook Credits coming to a Target near you

Target announced this morning that it will be selling Facebook Credits gift cards starting Sunday, September 5, through its 1,750 U.S. retail stores and on Target.com. The gift cards will be available in values of $15, $25, and $50.

Facebook Credits, which debuted in May last year, is the social networking site’s virtual currency that lets users purchase items in more than 150 social games developed for its app platform.

They initially proved controversial, in part because Facebook is taking a reported 30 percent cut of virtual sales. But after some tense negotiations, major developers like Zynga and Crowdstar have incorporated the currency into their offering and agreed to split revenue with Facebook, making it a viable moneymaker for the site, which had previously dabbled in its own virtual gifts. Sean Parker, Facebook’s first president, said he expects the business to drive around one-third of the site’s revenue this year. (He is no longer actively employed at the company, but remains a large shareholder.)

With Americans expected to spend $1.6 billion on virtual goods and $86.2 billion on retail gift cards in 2010, the combination makes for a lucrative opportunity for Facebook: It wants a share of the pie. For its first physical retail offering to consumers, there is some irony in the fact that it comes from its virtual currency business.

Apple’s iTunes gift cards hit retail stores some years ago and have turned out to be popular holiday gifts. Back in March, Zynga also began to sell its own virtual currency gift cards across outlets like Target, GameStop, 7-Eleven, and BestBuy. The cards, besides serving as gifts, also enable those without access to PayPal accounts or credit cards to purchase items online. For young players of games on social networks, that’s a draw.

While Target is currently the only outlet to retail the gift cards, two or three more are expected to sign up in the coming months.