Commerce Expansion Adjustment

[Sabre Wulf]

Anyone understand the email from the Windows Phone team about the Commerce Expansion Adjustment in some markets?

As far as I understand, they are adding 13.9% to the existing 30% that they deduct from your app fees. Meaning in those Markets you will get 13.9% less than you do now. So their point is, to compensate you need to charge more for your app in those Markets to earn what you did before (and thereby making the app less attractive - users already moan that the base price is too much).

Perhaps I am wrong though, the information is not clear (to me), and since this is a Key Priority for Microsoft, as stated in the email, a simple example would have been nice, to make it crystal clear.

I fail to see how this justifies a title of: "Increasing monetization opportunity for Developers". Quite the opposite, unless I am off track.

Dean.

 

[Catholic Tech Geek]

I got that e-mail from Microsoft as well. From my understanding, Microsoft wants to enable "alternate methods" of payment for your program (whether that be for the cost of the program in the store or the cost of an in-app purchase) where credit card usage isn't great. Unfortunately, those "alternative methods" such as billing to your monthly cell phone bill have a higher processing cost then using a credit card does. As a result, in order to cash out, you are correct that besides Microsoft taking its usual fee, Microsoft is also taking an additional percentage fee to help feed the cost of enabling consumers to use these alternate payment methods. This can make determining your actual payment more difficult. Instead of taking a constant 30% away and what is left is yours, you now have to get the list of countries where these alternate payment methods are being used, and then take out 13.9% of the total of proceeds from countries on the list before you have successfully figured out your payment.

It seems that Microsoft is trying to enable more (monetary) freedom for users. In exchange, developers get an extra percentage taken out the paycheck to enable that freedom, but the thinking is that if you give the user that freedom, the amount of new purchases will increase as opposed to if the extra freedom was never given.

 

[Sabre Wulf]

I agree with you, that that is the intention. And you have worded it with the directness that I expected Microsoft should have done.

 

[Antoni M]

Thanks for the previous post. It was a big help, but still two things aren't clear to me:

1. Is Microsoft taking this 13,9% from all payments in the country where alternative methods work, even from the payments made by credit card?
2. Do I have to agree to those alternative payments, or do they work automatically in countries where they are available?

Can anyone please clarify this?
Anthony

 

[jeffmk]

1. Is Microsoft taking this 13,9% from all payments in the country where alternative methods work, even from the payments made by credit card?

You should consult with your contract laywer (and I am definitely not one), but it doesn't seem like they will charge you for credit card transactions in such countries.

The App Developer Agreement, section 1, Terms and Conditions, states:

g. "Commerce Expansion Adjustment" means an additional percentage of Net Receipts for an App or In-App Product which is retained by Microsoft for certain types of transactions in certain countries or regions [...]. The countries/regions and transaction types subject to the Commerce Expansion Adjustment are set forth at http:[slash slash]go.microsoft.com/fwlink/p/?linkid=248127. The Commerce Expansion Adjustment shall be thirteen and nine-tenths percent (13.9%) of Net Receipts for each App or In-App Product, which shall be added to the Store Fee for transactions subject to the Commerce Expansion Adjustment.​

(Emphasis mine)

Further, the link above (which I couldn't post as-is due to low post count) contains the following in the "Price considerations for specific markets" section:

Payment methods such as mobile operator billing can help increase sales [...] in markets where credit card use is low. Due to the higher costs to enable such payment methods in these markets, a Commerce Expansion Adjustment of thirteen and nine-tenths percent (13.9%) is added to the Store Fee deducted from Net Receipts to calculate the Application Proceeds payable for paid apps and in-app purchase transactions in the countries/regions and using the payment methods [...].

The Commerce Expansion Adjustment will be applied to all transactions processed for the specified Country/Region and Payment Methods [...].​

(Emphasis mine)

To me the most vague/ambiguous word in the contract is the word "and" (insert Bill Clinton joke here), but it seems to imply that (1) the country must be listed in the table (e.g., "Mexico"), AND 2) the payment type must be listed in the table (e.g., "mobile operator billing"). If and only if both apply, the transaction will be subject to the commerce expansion adjustment of 13.9%. Otherwise (e.g., Mexico AND credit card payment), the transaction will be subject to the normal store fee of 30%. Again, have this contract interpreted by a lawyer before accepting my interpretation as how it actually would be.

2. Do I have to agree to those alternative payments, or do they work automatically in countries where they are available?

It seems like Microsoft will handle accepting those alternative payment methods (same as you don't have to worry about the details of processing credit card payments), assuming you choose to use their "commerce engine" -- hence the entire need for the "commerce expansion agreement" to begin with. If you choose to do something else, it would be up to you. (See requirement (e), "In-App Commerce", of section 5, "APP REQUIREMENTS", of the App Developer Agreement for details.)