Offerpal Media said today it is laying off an unspecified number of staff, in part because it lost out to a rival in the race to provide alternative payments with Facebook’s new virtual currency system.

Rival TrialPay appears to be the winner in the competition to provide alternative payments, or offers such as signing up for a Netflix subscription in exchange for Facebook’s virtual currency in a game. Many social game makers are moving away from their own virtual currency providers to Facebook Credits, and that in turn is causing the upheaval in the offer business.

In a letter to his staff, Offerpal chief executive George Garrick said that “Facebook has indicated to us at least initially they have selected another provider to be their alt-pay partner for purchases of Facebook Credits. We respect this decision, maintain a good working relationship with Facebook, and will do our best to facilitate the smoothest possible transition for those games which move to the Credits system.”

Garrick said that once the apps are switched to Facebook Credits, Offerpal will no longer provide offers for those apps. As a result, Offerpal has to lay off its staff and re-focus its resources on growth areas that include providing offers for other game platforms such as the open web, new internet vertical sites, and mobile apps. It isn’t clear why Facebook chose TrialPay instead of Offerpal, but perhaps it had something to do with past history. Offerpal was embroiled in the offer scam controversy last fall, when it was found that some of its offers were deceptive. Offerpal and other offer companies cleaned up their act. But memories may be long in this industry.