Faster credit processing... but higher fees

[Innula Zenovka]

Read all about it at Faster Credit Processing & Upcoming Changes to Fees

The old fee of a US$1 flat rate charge for cashing out it being increased on April 5th  to a 1.5% charge,with a miniumum of US$3, but they apparently expect "approximately 75% of process credit requests to be completed within 2 business days."  (LL's emphasis).

 

 

[Alwin Alcott]

a raise of cost between 300 and 1500% .... and raising buying costs with 33%...well.... ehm...

/me chokes....

[steph Arnott]

With the US$ exchange rate creeping up that is a rather unwelcome extra cost. LL seem to forget about  the non US account holders. Can really see why so many are leaveing SL.

[sirhc DeSantis]

With respect, while nobody likes any costs going up, why on earth should the lab be any different than any other business in that you think they should single handedly compensate for non us currencies failing to perform against the currency they operate in?

Unless there are some figures out there showing that the majority of actual paying customers have costs that are not US $ based, of course, which would be interesting to see.

[steph Arnott]

Well if you think SL is 90% US citizens then your very miss informed,

[Innula Zenovka]

Sorry, but I don't see it, steph.

If you're thinking about the increased cash-out fees, that's paid from the US$ amount you're cashing out, so exchange rate fluctuations don't affect it.

If you're thinking of the increased fee for buying L$, that's an increase of 10 cents, from 30 cents to 40.    To my mind, if the 10 cent increase is such a big deal to someone, they're unlikely to be buying L$ in the first place.

[Darrius Gothly]

Jamming two events together ...

1) Cashing out is an automated process. It happens beyond the reach or involvement of humans unless there is an issue raised during the "Fraud Detection" stage. I'd guess that more than 99% of cashouts go through without so much as a wiggle of the "bad things" meter. Computing processes and associated costs are, for the most part, going down not up. Decreasing the time to receive your money is achieved by improving the Fraud Detection algorithm .. again a purely compute-bound expense.

2) Linden Lab has recently undertaken a massive new development project and has had to hire on many new employees to accomplish this. They have said quite loudly that it will have no impact on SL ... but i don't believe it.

Can we really say these two are NOT related? OR does it seem more logical that #2 has demanded #1?

[Phil Deakins]

I think that Steph is getting at the exchange rate fees for her are going up, so she already gets less RL money for her L$. And now the cashout fees are going up, so she'll get even less. I think that's what she's getting at.

[steph Arnott]

Was what i meant.

[Innula Zenovka]

I still don't really see it.

If I cash out US$200, then that will cost me $3.00 in transaction costs.   If the value of the $ rises against the £ (as it has been doing in recent weeks) the $3.00 is more in terms of £ Sterling than it was a couple of months ago, but so's the US$197 I receive going to be worth more than it would have been in January. 

I don't see how, in any real terms, the fact I'm exposed to currency fluctuations makes the cost increase more burdensome for me than it is for someone in the USA.   

[steph Arnott]

The exchange rate of the the same US$ amount used to equate to GB£100 it is now GB£90. As i said it was rarther iunwelcomed news, it simply meant i am not jumping around with joy at the increased fee. As i can not do anything about it, i was expreesing my irratation.

[DavidThomas Scorbal]

Costs go up, that happens. But making it a percentage of the amount you're cashing out? That's just greed, pure and simple. LL sees how much people are making, and they just simply want a piece of it.

Or am I mistaken? Maybe the system they've implemented requires squirrels to carry $1 at a time over to a wheelbarrow, thus the need for higher fees for higher amounts.

Gimme a break - it's a number. Doesn't matter of it's $10 or $5000 - it's one transaction. 

[Innula Zenovka]

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steph Arnott wrote:

The exchange rate of the the same US$ amount used to equate to GB£100 it is now GB£90. As i said it was rarther iunwelcomed news, it simply meant i am not jumping around with joy at the increased fee. As i can not do anything about it, i was expreesing my irratation.

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No, steph.  You complained that the US$ was rising against other currencies, which it has been doing (or certainly it has been doing against th GB£, which is the currency in which I'm interested).

That means that it's buying more £s than it was a couple of months ago, not less.  Let's use some actual figures.    

According to ExchangeRates.org.uk, on January 7 2016, the rate was 1 USD = 0.6838 GBP.   On March 6 2016, it was 1 USD = 0.7036 GBP.   That is, the dollar has risen against the pound over the last 2 months, which is good news for Americans visting the UK and bad news for Brits visiting the USA.

So let's see what that would mean using LL's new charges.   If I cashed out US$200, LL charge me 1.5%, so that's US$197.00 arrives in my PayPal account and I want to change it to £ and put it in my bank account.   

At the January 7 rate, I can change it for £134.71.    At the March 6 rate, I can change it for £138.61, which is £3.90 more.

If we were using LL's old handling charge, a flat rate $1.00, I'd be $2 better off on both transactions, of course, as would an American be, but I don't see how the fact the $ is rising against the £ is hurting me.

[steph Arnott]

All fine if you cash out US$200, what about those cashing say US$40 or US$15, that US$3 slap is a nice incentive to say stuff it. Also i love the inference that LL was making up the short fall on transactions, no company would do that, one makes an agreement with the other and the closer truth is, that agreement has ended.

[DartAgain]

From the blog post: "The ability to redeem Linden dollars for real money on the LindeX is an incredible facet of Second Life. We believe that creators should be able to profit from their creativity, and we’re proud of the success that Second Life creators have achieved. Last year, users redeemed $60 million (USD) from the Second Life economy, and for many, the virtual world is a significant source of real income."

But hey, while you're remodelling the main building in San Francisco and hiring more employees for Sansar, in which you'll take a much higher cut, why wait? In fact, why not take it off both ends of the transactions for those users that make a "significant source of real world income".

By the time you skim the near million off the top in percentage, and factor in minimums you're up to 2-4 million out of the user economy. That not factoring in the profit made from purchased L$ that are never cashed out.

I hear some companies would give the perk of better service and not charge users for it. You're only charging us about a million a day that we're gaining for the priviledge of faster cashouts, what a deal. That could come out of your margin LL, not ours. LL is nothing if not predictable.

[Darrius Gothly]

@Innula: Thank you for posting this. It's very disappointing news .. but not that surprising. *sigh*

@Steph: You are right on in thinking that many people cash out well below the $200 USD cutover point where lower amounts still incur the minimum $3.00 "service charge". I suspect the most immediate reaction (for those aware of the change) will be to allow their L$ balances to accumulate more and cash out only once they cross that $200 line. Those not aware will no doubt freak out when they go to cash out $20.00 and see they now only get $17.00 instead of the expected $19.00. And I agree, I sincerely doubt LL has been taking a loss on each cashout transaction.

@DavidThomas: I wouldn't call this "greed" .. per se. I would call this "Modern Business". Today's rule of business is to cut to the bone, sacrifice whatever you need to sacrifice, pay no attention to long-term outcomes .. just make sure you improve the instantaneous numbers. For a real definition of Greed, look at the ATM owners that charge $5.00 to withdraw $20.00, or the payphone companies that don't allow coin-calls but will instead reverse the charges to the called number .. at the tune of $100.00 and up per minute.

@DartAgain: (tip-o-the-hat) I suspect we both saw this coming.  New projects always .. ALWAYS .. tap into the income stream of existing projects. Did anyone truly expect the Investors (who have demanded LL increase their own cash out despite falling customer income) would bankroll a brand new, untried and wholly blue-sky new venture? With LL's history of acquiring companies with new ideas only to trash them?

@Linden Lab & Ebbe: Kudos for finding yet another way to suck money out of your customers. Never mind the long-term effects will be to decrease Creator cashouts, motivate those same Creators to abandon or diminish their involvement in SL, and eventually result in less customer income for you .. the short-term outlook looks very rosy .. for you. Just remember the old saying "Penny wise, pound foolish."

I've spoken many times in many venues about the most damaging failure of LL's business ethics: The failure to value Trust as an absolutely essential component of doing business. Once again you have seen fit to make a change, promote blatantly false reasons for that change .. and then expect that your customers will just "deal with it." Apparently the extant opinion is that we'll stick around and take it .. no matter what. But if you really believe that then you've got bigger blinders on than we do. You only need to look at your income trend over the past decade to see that an ever-growing number of people are no longer willing to suffer just to be your customer. That number continues to grow, and at a faster rate than new users come to the platform.

Your new project is iffy at best. Taking steps like this while falsely claiming that you are no longer able to cover the shortfalls is bound to negatively impact future business for LL. Each customer you lie to, anger and drive away, is 10 fewer customers that will be interested in even looking at Project Sansar. Keep in mind that the Customer Base has a longer memory than an elephant .. and far less patience than Godot.

Need proof? Look at how dramatically Apple's stock declined after the death of Jobs, and how it continues to suffer .. even going so far as to be called "risky" .. with no more impetus than slight rumors and whispers. They have only slightly jiggled Consumer Trust; imagine the outcome if they had begun treating their customers as enemies and opponents in the same manner as you treat us.

[OzwellWayfarer]

I am hardly jumping for joy ovr this news and I am usually pretty critical of LL policies, but to be fair, the cost of merchants selling via than Marketplace is very low (5%). I cant name any oher similar service with fees that low.

In-world transactions are 0%. So, cost of land/tier aside, the cost of doing business in SL is still pretty inexpensive.

What LL SHOULD be doing (sorry to beat a dead horse) is finding ways to diversify the land offerings or reduce tier just a LITTLE to stop the slow steady loss of users with land. Or offering more free mainland to premium users. Something. Anything.

Any company that tolerates a near decade long bleed in their main product needs their heads examined.

Adding extra small fees to a declining inworld economy is just shuffling deckchairs on the titanic. Finding ways to take a bigger slice of less pie, instead of finding more pie.

FIND MORE PIE LL!!!

 

[DartAgain]

Some good points. They certainly won't be claiming that we're taking out $60 million next year.

I think this is also penalizing us, or rather using us to float users now being able to cash out in Blocksworld, LL's other product, which is a new development. As usual, SL users foot the bill for every bright idea on all their products. 

[Darrius Gothly]

And here's the real kick in the head: I personally wouldn't mind shouldering a bit more of the load (as an SL user) if they'd be honest about it. I suspect there's a fair number of others that feel the same way. But being given blatantly bogus reasons as if we're idiots? That's just disrespectful.

"Doc? Tell me it's gonna hurt and I won't yell. But tell me I won't feel a thing .. and I'm gonna knock your block off."

(pun only partially intended)

[Pamela Galli]

This is going to mean a MUCH bigger cashout fee for me, and anyone else who is making their living in SL.  I will not be cashing out as often as I have been, which means I will not be getting my money faster but much more slowly than before. 

[Isilmeriel]

I'm confused about this "Each transaction actually costs us more than the $1 (USD) fee we have been charging" statement. It's not like we've actually ever had just the flat $1 fee. There's also a 3.5% fee for converting L$ to USD in the first place.

Adding in the new 1.5% makes it a 5% fee in total from L$ to paypal, and this is on top of the 5% fee for those of you who rely on marketplace for the majority of sales. Granted, 5% isn't draconian compared to some other virtual asset market services, it's still a major increase relatively especially at a time when overall user numbers are declining.

Just seems incredibly misleading to complain about receiving only a "flat rate" of $1 per transaction...

[Goldenboy Planer]

This is not good news for business owners, taking money out of Second Life. No matter how you look at it; there will be higher expenses on money transfer, a service that I expected was automated?

The cost also increases for buying Lindens - it's unfortunate. A lot of users will spend less money, earnings goes down and costs will go up.

One can only speculate why Linden Lab does this. I think we’re seeing the changes into the new financial mechanisms made for Project Sansar.

[Phil Deakins]

There's a maximum charge of US$3, Pam. If you're making enough for your RL livelihood from SL, you're not even going to notice the difference, so there's no need to change your cashout frequency. What's US$2 extra? Two drops in the ocean, that's all.

[OzwellWayfarer]

Think you read that wrong Phil. $3 is the minimum, and then 1.5% thereafter up to $15 (which is 1.5% of $1000 of course).

[Pamela Galli]

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OzwellWayfarer wrote:

Think you read that wrong Phil. $3 is the minimum, and then 1.5% thereafter up to $15 (which is 1.5% of $1000 of course).

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Right. I do not care about a few dollars. But LL is already getting several hundred dollars a month from me for selling Lindens, and this fee will be on top of that and be WAY more than they need to cover the expense of cashing out. Why the sliding scale? it does not cost more to send $1000 to PayPal than it does $10. All it means is I will have to wait weeks to cash out, or pay an exorbitant fee.