Apple applies a 30% App Store fee to NFTs

Apple has dropped a new App Store policy that formally allows in-app purchases of non-fungible tokens (NFTs) on its platform, but also requires a 30% transaction fee that has been called a de facto ban on sales.

In addition to applying standard, mandatory commission to NFT sales, the update to App Store policies announced Monday (October 24) also requires apps to have all necessary licenses in any region where they are sold.

By doing this, Apple has separated the NFTs that contain content such as art, videos and music from other cryptocurrencies such as bitcoin, ether and dogecoin, which can be traded on exchanges such as Binance, Coinbase and FTX without using Apple’s in-app purchase platform.

Aside from the 30% commission, considered a deal breaker on its own, Apple’s in-app purchases don’t support crypto as a currency for payments – a big problem as most NFT marketplaces price tokens in ether and other digital assets, and they only have recently started accepting payments denominated in dollars.

No thanks

As a result, NFT marketplaces have refused to go the Apple route. It’s not hard to see why. Even with NFT sales collapsing this year — with Dune Analytics noting that September’s $466 million in NFT sales are down 97% from January’s $17 billion — Apple would have brought in $140 million last month if sales were through apps their.

Some, like the top marketplace OpenSea, offer an Apple app that can only be used for surfing. Magic Eden, a marketplace on the Solana blockchain that has become the best alternative to Ethereum for minting NFTs, has simply decided to forego an Apple app due to price, co-founder and chief technology officer Sidney Zhang told The Information.

While the vast majority of NFTs are minted on Ethereum, the cost can be prohibitive — $50 to $75 has been called a fairly common price — leading NFT creators to jump to other blockchains.

NFT sellers are typically charged a 3% to 5% commission on top of the coining fee charged by the blockchain, so it’s not just marketplaces that are avoiding Apple apps. Merchants have not expressed interest in taking that kind of hit on peer-to-peer (P2P) transactions.

But it’s not just NFT sales that Apple’s restrictions have limited.

The new rules state: “Apps may allow users to view their own NFTs, provided that NFT ownership does not unlock features or functionality within the app” and that “Apps may not use their own mechanisms to unlock content or functionality, for example, license keys, augmented reality markers, QR codes, cryptocurrencies and cryptocurrency wallets, etc.”

This appears to exclude other functions offered by some NFTs, such as acting as a ticket to an event, proof of payment for a product, or providing access to special content.

Wider opposition

Unsurprisingly, Apple’s rules have run into wider opposition to their stranglehold on payments.

Epic Games CEO Tim Sweeney, who is suing Apple over its in-app payments rules after it booted the popular Fortnite game from the App Store after it allowed in-app purchases, called out Apple on Twitter for “crushing another new technology” with its “grotesquely overpriced in-app payment service.”

Now Apple is killing all NFT app businesses they can’t tax, squashing another new technology that could compete with the grotesquely overpriced in-app payment service. Apple must be stopped.

— Tim Sweeney (@TimSweeneyEpic) 23 September 2022

A September ruling in that case ordered Apple to allow other in-app payments, but declined to call Apple’s overall control over iPhone apps or the way developers can process payments an illegal monopoly. It is likely to be delayed while appeals continue. But the EU is looking at banning Apple’s refusal to allow the use of third-party apps unless they are uploaded via the App Store.

Beyond that, crypto investment and services firm Galaxy Digital went further, calling out Apple’s 30% NFT fee as a policy that will limit wider adoption of Web3 technology.

Some game publishers are still wary of web3 integrations. @Ubisoft has gone back on its initial bullish comments on NFTs. @Apple seems to stick to 30% tax on in-app #NFT purchase, despite the likelihood that it will limit web3 adoption.

— Galaxy (@galaxyhq) 24 October 2022