For successful monetization, it's essential to offer players the widest selection of payment methods and shorten their path to purchase. This is the perspective of experts at Xsolla. Implementing a ready-made payment solution is the best way to manage this process. Here, we discuss the challenges developers face when they decide to handle payments directly.
Tax Burden
Developers usually aim to promote their game in multiple countries or even worldwide. Game developers' activities are regulated by local tax laws in all countries, but the tax rate and conditions for registering as a taxpayer vary by region. Before registration, developers must endure a complex process, filling out paperwork and awaiting approval, followed by filing tax returns and calculating the unit economy* with taxes specific to each country.
*Unit economy is a metric that allows the calculation of profit/loss per customer. It helps in determining the financial viability of scaling the project and identifying its break-even point.
To accurately assess the tax burden, it's essential to implement an algorithm that correctly identifies which country's tax to apply to a transaction. Besides the location of the user making the payment, factors such as the country where the bank card was issued, phone number, and payment method need consideration. To avoid late fees and correctly fill out all declarations, paying for competent legal experts is a necessity.
Legal Issues
In addition to the peculiarities of tax law, some countries have restrictions on working with non-resident companies. For example, in Brazil or India, establishing a local legal entity may be necessary. Even if entering the global market is not initially planned, legal challenges can arise within a single country when establishing cooperation with common payment methods. For instance, in Russia alone, negotiating and clarifying details with the top five payment systems can take up to two months.
Payments
The payment phase often encounters two issues: high payment system fees and payout delays due to amount limitations. Developers must wait until the balance reaches a withdrawable amount. Developers without market knowledge may not realize the significant portion of payment collected by the system.
In contrast, the “Xsolla Payments” solution guarantees a lump-sum payout from all payment systems on the 30th day and uses transaction registries for reconciliation, ensuring developers receive the total due amount.
Anti-Fraud
Players may dispute transactions they didn't initiate or made by mistake, contacting banks to open a dispute. If the developer cannot prove the transaction's validity, a penalty (ranging from €10 to €25) must be paid.
If disputes constitute a significant share of overall credit card traffic, there's a risk of being monitored by international payment fraud monitoring programs, and banks may temporarily halt card transactions. To minimize such risks, it's advantageous for developers to work with intermediaries, who often assume part of the risk and employ anti-fraud solutions.
Customer Support
When developers work directly with payment services, all complaints from dissatisfied players are directed at the game's creators. Developers typically lack the tools to resolve payment issues, forcing staff to divert time to appease upset players. Implementing a payment solution can save both employee time and company money. For instance, “Xsolla Payments” handles user support and promptly resolves all transaction issues while developers focus on improving the game.
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By implementing an external payment solution, developers save not just time but also finances: “Xsolla Payments” tackles all tax and legal matters, offering players a choice of 700+ payment methods — an approach that boosts loyalty to both the game and the publisher.
Today, authors of titles like Phoenix Point, Mutant Year Zero: Road to Eden, Smite, and other games work with “Xsolla Payments.” Among Russian partners are developers of Royal Quest, Life is Feudal, and Niffelheim, as well as the browser-based “Legends of the Ancients.” The publisher of the latter, Alexey Lebedev, explained the integration of the external solution as an optimization of expenses:
“For developers not yet considering external payment solutions, I recommend creating a comparison table with several options to weigh risks, conversion rates, and the costs of cashiers and accountants. If our team had implemented the payment solution independently, we would have spent not only a lot of time but also finances.”
Lebedev also highlights that his primary interests were high conversion rates, receipt interaction, continuous player support, and document management. He considers integrating these solutions internally a mistake — instead, they should be outsourced to allow the team to concentrate on development.