Apple has decided to take its slice of the NFT pie by levying a 30% commission on in-app NFT purchases. According to an insider's report published in The Information, on September 23, Apple has updated its commission policy, forcing NFT iOS apps, such as marketplaces, to sell NFT through in-app purchases.
This means that payment for NFTs sold within the iOS app will not be completed using a third-party payment gateway. Instead, the payment will be processed using the Apple Store's gateway.
While Apple's commission fee has been a hot topic of debate and criticism, forcing NFT companies to process transactions using its app store's payment gateway has sparked more outrage than praise. Could this be the end of NFT app businesses on the iOS store?
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What to Know About Apple’s 30% NFT Commission
The tech giant is known to charge a hefty 30% commission on app sales and subscriptions on its app store. This fee has been criticized recently, with several developers protesting the commission and the company's apparent App Store monopoly.
Both Facebook and Microsoft have voiced their displeasure with the 30% charge. In addition, Apple is still involved in a legal dispute with "Fortnite" producer Epic Games over the latter's effort to evade the commission by installing a direct payment mechanism in defiance of App Store policies.
Apple is now extending its 30% commission model to the NFT sector. The commission model will affect every NFT app sold on the App Store, such as utility apps offering NFTs like OpenSea's mobile app or the NFT Creator app.
It'll also affect NFT sales within these apps. For instance, when someone sells an NFT inside an NFT marketplace iOS app, Apple will take 30% off the total transaction cost.
30% Too Much for NFT Startups to Pay
The fluctuating price of cryptocurrencies has affected the market value of non-fungible tokens (NFTs). Therefore, it’s only logical that NFT startups would want to leverage the large user base of the Apple App store to reach a wider audience. However, many of them won’t do so.
The issue here is that most NFT marketplaces charge anywhere between 1% to 3% on NFT transactions. Therefore, complying with Apple’s policy would mean that marketplaces like Rarible and OpenSea, offering iOS apps, would suffer a huge loss since the 30% is higher than what they charge on average.
But the commission isn't the only problem. According to The Information, some NFT companies are struggling because users may only make in-app purchases on the App Store with dollars or another currency whose value is supported by tangible goods. It does not support any cryptocurrencies.
Given the extreme volatility of the cryptocurrency market, developers cannot simply specify a dollar value equivalent.
In light of this, NFT traders are trying to leave the Apple Store. In fact, after learning about the 30% commission policy, NFT firm Magic Eden, a well-known NFT game startup, decided not to provide its service on the App Store.
Then there's the fact that certain NFT companies are concerned about Apple's biased approach to fixed pricing for in-app purchases. According to Apple Insider, Rarible's CEO Alexei Falin feels that the tech giant "doesn't really want App Store users" to trade in non-fungible assets.
Falin also pointed out that he experienced a lengthier approval process for Rarible’s application on Apple Store than on Google Play.
While it seems like Apple doesn't want NFTs in its app store, there are some good sides to the policy. For one, Apple’s commission policy means that the tech giant recognizes the potential of non-fungible tokens. This is important as it illustrates how far the space has grown over time and can lead to the potential mainstream adoption of NFTs.
Some NFT projects already see the policy as a great opportunity and are already gearing up to take advantage. For instance, Asad Malik, Jadu AVAs founder, commented about how prepared his company was to utilize the app store fully once their mobile app launches before the year runs out.
We can only wait to see how the NFT space will adjust to this new development going forward.
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