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When a customer refunds your paid app, Apple refunds its 30% cut [edited]

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Re: When a customer refunds your paid app, Apple refunds its 30% cut [edited]

#381

Post by Spivak »

sbarre wrote: post #364
Spivak wrote: post #213

Earlier quoted context omitted.

This is just sales commission rules though. If I get a 30% commission for a sale when the customer is referred by me and at some point in the future the customer asks for a refund I don't give my commission back. Our transaction was done when the original sale was made.

This is not a valid comparison, there is no referral or commission happening here. Compare it more to sales tax, which is a much closer comparison because it is required as part of the transaction in a monopoly ecosystem (much like a sales tax is in a country). If a vendor adds tax to a price, and then charges the customer, and the customer gets a refund, the customer get the sales tax back, but the vendor then doesn…

I mean would it feel better if you got paid $10 but then Apple immediately billed you $3 for marketing and sales services?

Because that’s basically Apple’s whole thing. If you want you can just ignore their existence. You can run a very successful business on the web, Android, Windows. But getting your app on iOS and in front of their customer base is really valuable. Better than any billboard or FB ad. They know that customer acquisition is hugely expensive and that being able to sell on their platform will make you more money than not and so they charge like it.

The difference between having Spotify on iOS that can’t mention that premium exists (because that would be using iOS as a marketing vector which Apple charges for) and therefore has to do their own customer acquisition, and being able to convert customers in-app makes a big difference.

Re: When a customer refunds your paid app, Apple refunds its 30% cut [edited]

#382

Post by wrsh07 »

gamblor956 wrote: post #268
chadlavi wrote: post #102

Payment processors generally don't refund fees on payments when the payments are refunded, this isn't new. It's remarkable mainly because (a) it's 30%, not 3% and (b) the App store doesn't position itself as a payments processor the way Stripe does, so it sounds really weird that they would act like one. If the app store took a 3% chunk and never refunded it regardless of the ongoing status of the transaction, that w…

Credit card companies (i.e., Visa, Mastercard) absolutely do refund fees on payments when the retailer processes a refund. This is why retailers generally require you to use the same method of payment to get your refund. It's uniquely online processors that do not refund fees.

Notably, it's a somewhat recent change for Stripe.

They had refunded fees but iirc it meant they were paying a small fee per refunded transaction (which in a sense subsidizes apps that incur frequent refunds) which they wanted to stop doing.

A quick search showed they started refunding fees in 2012 and stopped in 2017. Here's a discussion from the past couple years: https://news.ycombinator.com/item?id=22371330

Re: When a customer refunds your paid app, Apple refunds its 30% cut [edited]

#383

Post by cortic »

zamadatix wrote: post #322
cortic wrote: post #260

Earlier quoted context omitted.

Source? Cause this sounds like wishful thinking.

https://qz.com/1683460/what-happens-to-your-itunes-account-w... https://support.apple.com/en-us/HT208856 https://discussions.apple.com/thread/250384392

https://qz.com/1683460/what-happens-to-your-itunes-account-w... -fraudulent gift card

https://support.apple.com/en-us/HT208856 -a problem with the payment method

https://discussions.apple.com/thread/250384392 -credit card fraud

I asked for you to cite sources on Apple banning people for repeatedly claiming a refund. Not for using a stolen credit or gift card.

Re: When a customer refunds your paid app, Apple refunds its 30% cut [edited]

#384

Post by nkrebs13 »

emtel wrote: post #361
jclardy wrote: post #278

Earlier quoted context omitted.

I think this is part of what is holding back iPad software. You can't charge $100 for Sketch and lose $30 when someone asks for a refund. Apple designed this around $1-$10 apps where losing $2 at volume is fine. What is worse, is that Apple doesn't remove the app from the user's device. When you get a refund of a paid app it is on the honor system for them to delete it. It is removed from their account, so they can n…

Can you explain that point a bit more? It doesn't seem to make any sense to me. You revenue is going to be number of sales * price - (number of refunds * price * 0.3). Factor, and you get price * (sales - number of refunds * 0.3). Your unit cost is 0, so the only thing that matters is if your revenue exceeds your fixed costs. I don't see how this would explain a disincentive to charge higher prices.

I'm not the person you're asking, but I can probably try to explain.

Take other payment processing platforms like Stripe as an example. Stripe charges $0.30 + 2.9% to process a purchase.

To help build your (and my) mental model: Price of item -> Stripe revenue (rounded)

$1 -> $0.33

$5 -> $0.45

$100 -> $3.20

Apple's 30% cut makes sense if they were expecting most apps to be roughly $0.99 (anecdotally, I remember this being true during the early days of the App Store) and the (presumed) few apps that cost more than $1 would be the "whale" developers that would subsidize Apple software development. But nowadays apps are a lot more powerful, feature-full, and development-intensive so higher prices are required for any hope of profit.

So the math you have is right, it's just that the path to profit is a lot harder when the ONLY way to sell your product is to have >=30% cut out immediately upon sale. Some stores set a minimum (e.g. $5) sale amount for using a credit card and those payment processing platforms have fees orders of magnitude less than Apple's App store

Re: When a customer refunds your paid app, Apple refunds its 30% cut [edited]

#385

Post by hn_check »

This isn't correct at all.

This is a serious misunderstanding by someone in a pretty incredible way. Literally a single person claiming this and _multiple_ people refuting it from their own experience.

Yet it's top of HN. Amazing. A lesson to never, ever trust anything here because the masses clicked an arrow.

Re: When a customer refunds your paid app, Apple refunds its 30% cut [edited]

#386

Post by BillinghamJ »

gamblor956 wrote: post #268
chadlavi wrote: post #102

Payment processors generally don't refund fees on payments when the payments are refunded, this isn't new. It's remarkable mainly because (a) it's 30%, not 3% and (b) the App store doesn't position itself as a payments processor the way Stripe does, so it sounds really weird that they would act like one. If the app store took a 3% chunk and never refunded it regardless of the ongoing status of the transaction, that w…

Credit card companies (i.e., Visa, Mastercard) absolutely do refund fees on payments when the retailer processes a refund. This is why retailers generally require you to use the same method of payment to get your refund. It's uniquely online processors that do not refund fees.

That isn't true. They enable the return of the interchange (from the issuing bank), they do not refund the scheme fees.

In fact, you will pay more on the scheme fees to process a refund, as you need to send another message into the scheme's network - often charged per message or per byte etc.

Interchange is not payment scheme revenue - it is just passed through to the issuing bank.

Re: When a customer refunds your paid app, Apple refunds its 30% cut [edited]

#387

Post by Andrew_nenakhov »

AnIdiotOnTheNet wrote: post #106
bronzeage wrote: post #8

App stores need heavy regulations. It's not only Apple but Google and even steam to a small extent. Apple is of course the biggest offender as they heavily guard their monopoly with code signing enforcement. This shouldn't have been legal. They are the very definitions of predatory competition squashing monopolies.

I don't see what kind of regulation Steam needs. They are hardly the only storefront on the platforms they support, aren't the default one, have almost no exclusive content, and don't even take a cut if you sell Steam keys on other stores. What is there to regulate? If you don't like their terms you can sell on a different store or distribute yourself, there's nothing stopping you like there is on a typical iPhone or…

Steam is not a monopoly. You can install other stores and you can acquire and install software directly on your computer.

AppStore and, to lesser extent, Google Play are monopolies, that severely restrict rights of their users, no matter what people say that 'Apple is not a monopoly because you can buy another phone'

Re: When a customer refunds your paid app, Apple refunds its 30% cut [edited]

#388

Post by arcticbull »

buildawesome wrote: post #339
syshum wrote: post #288

Earlier quoted context omitted.

PayPal is not a credit card processor, it is Money transmitter, different legally Stripe on the other hand is a credit card processor, and as a merchant you get a Merchant account, the same like Authorize.net who used to be the largest online processor before Stripe. Back in the day (and I have been out of that market for over a decade) Authorize.net absolutely refunded processing fees on refunds

Just to add, PayPal is also most likely a credit card processor, serving as a Payment Facilitator (PayFac), which enables others to become CC Processors. It happens that PayPal and Stripe are money transmitters, which may come with being a PayFac. Auth.net is a gateway/portal that facilitates CC transactions, and while you may be refunded on processing fees for the use of the gateway, someone, somewhere is likely eat…

Notably, Square, founded in 2009 didn't become a money transmitter until sometime in 2013, IIRC, and I think a few laggard states in 2014. This was in service of Square Cash, not the core payments business. They were, however, merchant of record the whole time.

Re: When a customer refunds your paid app, Apple refunds its 30% cut [edited]

#389

Post by wlesieutre »

chrisshroba wrote: post #367
mywittyname wrote: post #282

Earlier quoted context omitted.

> What is worse, is that Apple doesn't remove the app from the user's device. This. Is. Ridiculous. We all know this is an intentional design decision by Apple and that they would absolutely not have designed the workflow this way if they had to dogfood their own platform.

Serious question: Is this refund problem as big an issue as commenters here are implying? Is there data that shows that app developers are losing significant money due to Apple's fees not being refunded? I would have guessed that very few people ever request a refund on an app they purchase, but I have no data to back this up.

Original link includes this tweet estimating about $8000 cost from Codea: https://twitter.com/twolivesleft/status/1288491970248077314/...

Here's another example from Wil Shipley where someone purchased 30 education copies and then refunded all of them. Total for the day nets out to -18 purchases and sales of $-360:

https://twitter.com/wilshipley/status/768540129203855360

If you made say a high profile game that a particularly whiny subset of gamers took notice of, I imagine it could be much worse, but I don't know that this has happened yet. I'd bet money that it will though, and you have to wonder what Apple will do about it.

Re: When a customer refunds your paid app, Apple refunds its 30% cut [edited]

#390

Post by ivalm »

emtel wrote: post #361
jclardy wrote: post #278

Earlier quoted context omitted.

I think this is part of what is holding back iPad software. You can't charge $100 for Sketch and lose $30 when someone asks for a refund. Apple designed this around $1-$10 apps where losing $2 at volume is fine. What is worse, is that Apple doesn't remove the app from the user's device. When you get a refund of a paid app it is on the honor system for them to delete it. It is removed from their account, so they can n…

Can you explain that point a bit more? It doesn't seem to make any sense to me. You revenue is going to be number of sales * price - (number of refunds * price * 0.3). Factor, and you get price * (sales - number of refunds * 0.3). Your unit cost is 0, so the only thing that matters is if your revenue exceeds your fixed costs. I don't see how this would explain a disincentive to charge higher prices.

Your profit (at 0 unit cost) will be

(Sales not refunded * 0.7-refunds * 0.3) * price

If

Sales not refunded/refundsThen profit can be negative (you lose money because more people refund than not).

>57% refund rate literally makes you lose money from listing. But even if just quarter of people refund that eats almost half of profit.

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