Niall Moody

Post-#VATMOSS Payment Options for Small Devs

13/1/2015

Update 20/1/15: itch.io has now become a VAT-registered seller! I'll keep this post here for reference, but as far as I'm concerned, itch.io is the only option you need to consider now.

Having said that, I have also updated the Steam section and added a section on Paddle following conversations on twitter.


Note: I wrote this under the assumption that it will be a while before itch.io comes up with a better solution to the VAT mess. You might not want to jump ship just yet though, if this tweet by Sophie Houlden is any indication.

The recent changes to EU VAT rules have thrown a bit of a spanner in the works for those of us EU-based devs who have, up till now, sold our games through itch.io. I've been looking into the options available in this new landscape, and figured it would be worthwhile to summarise my findings.

I should note that this is aimed at those of us who are not earning a full-time wage from our games but simply wanting to earn a little money from them. If you're already earning a decent living from your games, you no doubt have a different set of options available to you. Also, disclaimer: I'm not an accountant. Before you sign up for any of these services, make sure you read their terms and conditions and know what you're signing up to.

First, How Does This Affect Me?

This site has a comprehensive explanation of the issue, but the short version is:

Starting on Jan 1st 2015, new EU laws came into force stating that if you sell any digital goods to someone in an EU country, you must charge VAT based on that country's rate. You then have to pass that VAT onto your own country's tax authority (which, in the UK, means registering for the HMRC's Mini-One-Stop-Shop, and filing quarterly reports).

In addition to this, you need at least two pieces of information confirming the customer's address, and if those two don't match, you will need a third. You will need to store that information for ten years on an EU-based server, in case your country's tax authority decides to check up on you. This being relatively sensitive information, I believe you will also need to register yourself under data protection rules, though I'm a little unclear on this point.

All of which adds up to an enormous headache if you're a lone dev and you're not earning enough to afford an accountant. Luckily, there are options if you want to comply with the law, but don't want to jump through all those hoops.

itch.io

Update: With the recent news, this section is now out of date.

itch.io is, sadly, the odd one out in this list. All the other options I'm going to list are essentially VAT-registered storefronts. This means that they take responsibility for ensuring their customers pay the correct VAT etc. and you, as a dev, don't have to worry about it.

itch.io is not a VAT-registered storefront. Instead, it is a marketplace which "facilities a transaction between buyer and seller. The buyer is ultimately paying the seller directly for each purchase." In which case you, the dev, are responsible for ensuring the correct VAT is applied, with all the various implications that result from that.

itch has introduced some VAT-specific features to make this slightly easier to do than it was previously, but you're still responsible for filing quarterly reports etc. The itch.io blog has a good post which goes into more detail about their approach to the VAT issue.

Unfortunately, because of this, I can't recommend selling your games through itch.io :( For small devs having to handle the VAT stuff yourself is far more hassle than it's worth. Which is crushing, because itch.io has been a hugely positive force for small devs, and it's not their fault that the EU changed the rules on them.

That said, I'm going to be judging the following payment options based on how they compare to itch.io. This is because, prior to the new VAT rules, itch.io was by far the easiest way to sell your games online. So before we move on, a quick list of the things itch.io gets right:

FastSpring

FastSpring is a general purpose (VAT-registered) e-commerce platform that's been around for a while now. It basically lets you put a link to a payment page on your website and, once payment is completed, emails your customers a link to your game. This does of course mean you will need to sort out your own web hosting.

The need for hosting aside, FastSpring offers relatively good terms compared to some of the other options here. It pays out twice a month (with a $25 minimum), and its fees are 8.9% of every purchase (or optionally 5.9% + $0.95). For a £3 game, this works out as roughly equivalent to the paypal fees you'd incur when selling via itch.io (though it doesn't scale as well for higher-priced games).

A potential downside is that customers might be more reluctant to pay via a general purpose e-commerce purchase page than with the other, more well-known options such as Humble, itch.io, etc. Beyond the 'I won't play anything that's not on Steam' crowd though, I don't know how much of an issue this actually is.

The Humble Widget

The Humble Widget is a widget provided by the folks behind the Humble Bundle which you can use to sell your games, with the option for customers to pay via PayPal or Amazon Payments. With the success of the various Humble Bundles, the Humble name is well-known and respected among games folk. Like FastSpring, you will need to sort out web hosting for yourself if you want to use the Widget.

Humble acts as a VAT-registered seller with the Widget, so you don't need to worry about that. As far as fees go, Humble takes 5% of the net revenue after payment processor fees (suggested here to be a further 5%). They pay out only after you've earned $250, within 30 days from the end of each calender month. It's not clear from the FAQ so I got in touch with Humble, who confirmed that the $250 figure is per-game, not per-dev. This puts it out of reach for me, as my games have yet to earn me much more than $200 combined.

Desura

Desura is a VAT-registered store à la Steam. As far as I can tell, Desura don't state their payment terms anywhere on their website, so the following information comes entirely from this gamasutra article.

Desura will only pay out once you've earned $500(!), and their fees are 30% of the sale price. Frankly this, combined with their incredibly unhelpful website, discounts them completely as far as I'm concerned.

Bandcamp

Bandcamp is a bit of a leftfield option here, being an online music store and not a games site. The recent announcement that they would become a VAT-registered seller in time for the introduction of the new laws, however, got me wondering if it would be possible to sell games through bandcamp too.

The short answer is: yes, it is possible to sell games through bandcamp. The longer answer, naturally, comes with some caveats. Firstly, as bandcamp is a music site, you will need to upload your game's soundtrack to bandcamp first. Then you can include your game as a bonus download that people will get when they buy your soundtrack.

The catch is that bandcamp don't allow zip or exe files by default for bonus downloads. They do, however, allow torrent files, so you could feasibly provide your game to customers via a torrent. That is, assuming you are in a position to ensure the torrent remains seeded (my knowledge of torrenting is fairly limited, so I'm unsure how you would go about restricting the torrent to people who bought your game; that may be an issue).

That said, there may be another option. I got in touch with bandcamp to confirm that providing a game via a torrent bonus download would not violate their TOS, and they replied that, not only would it not violate their terms, but that they would be willing to enable zip file downloads for individual game devs. They would only do this on a case-by-case basis, and they do have relatively restrictive file size limits for bonus downloads (100MB, though they may be willing to increase that if you ask), so it won't be for everyone. If you have a game with a strong soundtrack and a relatively small file size though, this could be a good option.

Of all the options here bandcamp is the closest thing to itch.io, in the sense that you get your own a store page, and you are paid via PayPal as soon as you make a sale. Bandcamp take a 15% revenue share, the details of which are outlined here.

Steam

Included for completion's sake, but I don't view it as a viable option for most small devs. Paying $100 for the privilege of maybe, possibly, eventually being allowed on Steam is not a good deal as far as I am concerned.

Steam is really only worthwhile if you have already earned enough from your game that $100 is an acceptable expense, and you've garnered a big enough fanbase that you have a reasonable shot at making it through Greenlight.

Update: Following this post's initial publication, @nihilocrat got in touch to point out that Greenlight can actually prove an effective way to drive sales on other stores. So perhaps that $100 isn't necessarily money down the drain? This is definitely a YMMV kind of deal though. Both the twitter thread and his Greenlight stats are worth reading.

Update: Paddle

Another option I wasn't aware of before I originally published this post is Paddle. Similar to FastSpring, Paddle is a general purpose e-commerce platform, with slick-looking tools and checkout options. It is VAT-registered, pays out monthly, and has fees which compare favourably to FastSpring (5% + $0.50 for every transaction). If you were already looking at FastSpring, I'd definitely recommend you check out Paddle too.

In Summary

That's a lot of words, so here's a TL;DR: right now, FastSpring's probably your best bet, though I'd say Bandcamp's definitely worth a look too. Update: Obviously, now that itch.io's VAT-registered, I'd recommend you stick with it.

I've tried to include all of the most relevant options I'm aware of, but if you know of others, or if I've got any of the above information wrong, let me know via tweet or email. I'll try and keep this article updated as the situation changes (ideally itch.io will eventually find a better solution to the VAT issue and we can all go back to it).