Developers Call Facebook Currency Transaction Fee a ‘Net Tax’

Developers whose platform of choice for game deployment is Facebook say that the social network's mandatory payment system ends up being a "twenty percent net tax" and seriously hurts their margin of profit.

"We thought conversions would go up and be around 15 or 20 percent,” said Kevin Chou, Chief Executive for Kabam, “But it turned out to be around 5 to 10 percent, meaning that we’re taking a 20 percent net tax.”

The quote from Chou was recorded by Inside Social Games during the Inside Social Apps conference in San Francisco. This quote seems to capture the general feeling among Facebook game developers about Facebook's virtual currency system.

When Facebook introduced its credit system they said it would make it easier for customers to purchase virtual goods using a more universal currency. While developers like the idea of a universal currency, they do not enjoy the fees Facebook is taking from them with each transaction. Facebook takes an estimated 30 percent from these transactions.

"Facebook credits is a wash for us," said Funzio co-founder Anil Dharni. "It increased the conversion rate but we actually saw a gradual decrease in average revenue per paying user. It’s hard to know why."

Some developers, like Funzio, have shifted emphasis away from Facebook to other platforms such as iOS.

One company, Wooga is defending Facebook Credits. Chief executive Jens Begemann said his company had been on Facebook Credits "since day one", and has not seen any negative trends. He also points out that he hasn't heard developers complaining about the 30 percent fee Apple charges.

Updated: we changed the title to avoid confusion on the percentage numbers  that appear in this story.

Source: Develop

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