Don’t be Afraid to be Your Own Merchant: Convert Customers from Established Digital Storefronts to Direct Buying

Today, the bulk of digital game sales happen on one of the console, pc, or mobile platforms. As a game developer or publisher it is almost unthinkable not to sell on Xbox, Playstation, Nintendo, Steam, Epic Games Store, Apple App Store, or Android Play Store. Few games have found success exclusively selling direct and even then the biggest games today are on all platforms with cross-platform play & progression. To do so, game developers & publishers are investing in building a set of backend game services to unify their games’ player base. This game backend can integrate with each digital storefront and also be leveraged to take direct payments. Read all about it in Raymond Arifianto’s blog post on democratizing in-app purchases with direct payment.

Taking on direct sales when established digital stores is sometimes a daunting task. There is comfort in just selling a product in a third-party store. They have an established user base, trusted payment options, take on risks of fraud, and handle taxes in a global economy. These established digital marketplaces traditionally take a 30% cut for any products sold, sometimes less. Regardless, when selling through a third-party store your product sales are just units sold in their stores. If there are issues with the product they are only responsible for the distribution and not the product itself. As an example, when buying a Bose headset from Walmart, to get real product support and feedback you would want to speak with Bose and not Walmart.

Having a first-party store and taking direct payments lets you capture the most loyal customers who are willing to come directly to you. This lets you build a closer relationship with the consumer, have higher fidelity data, and invest in your own direct distribution platform as opposed to paying the fee in third-party stores.

An example: At scale, even if only 10% of your user base uses direct payments in a first-party store, the savings from selling in third-party stores can offset the expenses of operating the first-party store.

When taking on the challenge of a first-party store and taking direct payments, there are additional responsibilities to consider. In addition to direct payments, you also need the foundation for a digital catalog, tracking digital ownership, tracking purchase orders, tracking payments & receipts, and all the tools for performing customer administration like refund management. A customer service team will be needed to help deal with first-party store and payment issues.

Operating as a global digital business there are also local tax responsibilities that might differ depending on where the customer resides, where your business entity is located and the local tax laws. At scale, a corporate lawyer or CPA might also be a required role.

Then there is fraud detection and management to protect yourself from liabilities. Direct sales expose you to nefarious actors and you will need the tools to identify fraudulent behaviors and block purchases to prevent losses. A finance team can be critical to the success of a first-party store.

Different payment providers have different levels of service. Some provide the raw payment transaction for cheap at volume. Others offer more layers of service like fraud and tax automation. An approach that we recommend is to use different providers for different market regions. For example, the US and European markets are typically more trustworthy and users are comfortable using credit cards. Being the usual primary target market for games, it might make sense to take on more responsibility for the US and European regions for cheaper transactional costs. However, regions like South America tend to have more complicated payment solutions, like paying cash in a convenience store and getting a code in return to use online. Dealing with taxes and fraud might be a high degree of difficulty and risk so relying on a payment provider that takes on a Merchant of Record responsibility can be worth the higher premiums.

No one could have predicted the speed of global digitization – from the eCommerce boom to the rise of cryptocurrency and the dawn of the metaverse. Thus, as part of our provider spotlight series, we will be highlighting our payments partners and why AccelByte has chosen them as some of our core providers for our clients in need of innovative solutions that flex to their needs.

Each payment partner specializes in global payments and has helped businesses thrive in the digital economy. Global payments are complex and ever-evolving, so payment providers build the technology and expertise to help our clients succeed - one transaction at a time. With a payment provider, you are able to convert customers from established digital storefronts into buying directly from you. Below, we’ve featured some of our providers:

Adyen

Adyen provides a modern end-to-end infrastructure connecting directly to Visa, Mastercard, and consumers' globally preferred payment methods. Adyen delivers frictionless payments across online, mobile, and in-store channels. With the aim of helping businesses grow, Adyen set out to build a platform capable of meeting the rapidly evolving needs of today's fast-growing global businesses.

Adyen's team is focused on building a modern infrastructure directly connected to card networks and local payment methods across the world, allowing for unified commerce. The Adyen platform enables businesses to accept payments, protect revenue, and control their finances in a single system.

Checkout.com

Checkout.com uses modular technology, allowing clients to seamlessly integrate the features they need, manage risk and fraud, and add new payment methods. Checkout.com also uses payment processing that powers growth. With Checkout.com, you are able to process payments anywhere with their global payments platform.

Checkout.com’s mission is to enable businesses and their communities to thrive in the digital economy. To do this, they provide fast, reliable payments in over 150 currencies, with in-country acquiring, world-class fraud filters, and reporting through one API. Checkout.com accepts all major international credit and debit cards, as well as popular alternative and local payment methods. In short, Checkout.com delivers innovative solutions that work with our customer’s needs, provides valuable insights into their payments’ performance, and offers expertise they can count on.

Stripe

Stripe is a single solution technology company that builds economic infrastructure for the internet with end-to-end payments, data, and financial management. The company’s software accepts online payments and runs global financial operations. Stripe helps new companies get started and grow their revenues, and helps established businesses accelerate into new markets and launch new business models.

Stripe’s unified platform brings together everything that’s required to build websites and apps that accept payments and send payouts globally. Stripe’s products power payments for online and in-person retailers, subscriptions businesses, and software platforms and marketplaces. Stripe makes moving money simple, borderless, and programmable. They also help companies beat fraud, send invoices, issue virtual and physical cards, get financing, and manage business spending.

Xsolla

Xsolla helps game developers and publishers operate more efficiently and sell more games. Serving only the video game industry, Xsolla caters to developers, publishers, and platform partners with solutions that solve the complexities of distribution, marketing, and monetization. Their goal is to increase your audience, sales and revenue.

Xsolla has built a suite of products that remove the barriers between creators and the support they need, enabling a system where every industry player can connect to get their best work done. Their single payment product has evolved to become an integrated set of tools and services giving industry players the ability to connect, collaborate, and grow.

Ready to be your own merchant? Request a demo here.

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