Linden Lab yesterday announced : Faster Credit Processing & Upcoming Changes to Fees. The devil really is in the detail with this one, first the good news :
We’re happy to announce that we will significantly improve how quickly we’re able to process a majority of credit requests.
Based on current data, we estimate that the upgrades we’ve made will allow approximately 75% of process credit requests to be completed within 2 business days.For a minority of requests, the process may still take 5 business days. Because we’re dealing with sending real money to users around the world, we may require additional information and perform other processes that could impact the time needed. A good rule of thumb is that the better we know you as a customer, the more likely it is we’ll be able to quickly process your credit requests.
Many will say that this still isn’t quick enough and other online services do offer faster cash outs. I used to be able to get money out of Diablo III faster than this. However, Linden Lab have procedures and are compliant with laws and regulations, those pesky things can slow matters down. I’m sure plenty of people will be happy about being able to cash out in two working days instead of five.
On the other hand, there’s some bad news :
In addition to taking time, processing credit and paying real money to users’ PayPal and Skrill accounts incurs costs to Linden Lab. Each transaction actually costs us more than the $1 (USD) fee we have been charging. To address that and in light of the significant investments we’ve made to improve the related systems and processes, we will be making some adjustments to the fee structure, beginning next month.
As of April 5, 2016, instead of charging a flat fee of $1 (USD) per transaction, we will charge a fee of 1.5% of the transaction value, with a minimum fee of $3 (USD) and a maximum of $15 (USD). Additionally, the fee for purchasing L$ on the LindeX will increase 10¢, from $0.30 (USD) to $0.40 (USD) per transaction.
People do not like paying increased fees and here we are talking about fees for buying and cashing out Linden Dollars being on the rise. The increased fee for buying Linden Dollars probably won’t raise much of an eyebrow, the rise in fees for cashing out will most certainly raise eyebrows as well as raising ire.
Responses on the official Second Life forum, a thread at SLUniverse and the comments on Inara Pey’s blog post on the subject certainly exemplify that some people are not happy about the changes in fees. This is unsurprising. I stopped playing World Of Warcraft for over twelve months because they raised the monthly subscription for UK subscribers by a quid, and that change was only for new subscribers at the time. Small rises can irritate people.
In this case, some of the rises are certainly not small in percentage terms. Today someone can cash out £1,500 with a $1.00 transaction fee, in a few weeks that fee will be $15.00. At the lower end of the spectrum, the minimum cash out fee with be $3.00, rather than $1.00. The end result there, I suspect, is that people with cash out less often, which I suspect may be something Linden Lab don’t mind.
One issue to bear in mind here is that when you sell Linden Dollars on the Lindex, they are already subject to a 3.5% fee, so these increased fees can really start to mount up. Someone who withdraws $1500 or more a month will now pay $180.00 a year in cash out fees instead of $12.00, that’s a big increase. Those who cash out $50.00 a week are better off withdrawing $200.00 a month, in those circumstances, your cash out fees would actually decrease slightly over a year.
So why are Linden Lab doing this? I have no firm information but I would hazard a guess that it’s due to Account and Tax requirements. Virtual currencies have came under increased scrutiny over the years and whilst trying to be compliant with the requirements, Linden Lab will have undoubtedly incurred extra costs. Linden Lab are possibly passing some of these costs on, and they suggest in their blog post that the cost of cashing out costs Linden Lab more than $1.00.
Another reason is likely to be Linden Lab looking in the long term at increased income streams. Virtual currencies, cashing out and remaining compliant with the authorities will be something Linden Lab need to be in control of when Project Sansar hits the streets and any other ventures after that which Linden Lab develop or provide services for. Second Life has long been criticised for its high tier fees, that’s a case of too many eggs in one basket, so it makes sense for Linden Lab to spread their eggs around.
The blog post ends with :
We hope that you’ll enjoy the improved speed of credit processing and understand that these upcoming fee updates help to support the complex work involved in enabling Second Life users to buy and sell Linden Dollars for real money at a massive scale, all while keeping the system reliable, safe, compliant with regulations – and now faster.
Second Life, Project Sansar and beyond need a compliant Linden Lab to thrive. Unfortunately compliance comes at a cost. Increased fees are never going to be wildly popular, but there are often many reasons for them and they are not always about lining the pockets of the company offering the service. Second Life remains a relatively low cost platform for content creators when compared to other ventures, even with these increased fees. Long may it continue.