Lengthy Withdrawal Process

Entropia Universe Economy Deposits & Withdrawals
21

This would be the mostly likely correct answer. To further expand on why this is correct, there are a few things that we can be certain of on how MA operates. The first is this:

Corporate revenues consist of the net sum of deposited and withdrawn amounts from Entropia Universe made by users. The net revenues are presented in the income statement after deduction of reimbursements requested by participants in Entropia Universe.
Or in other words, “Deposits - Withdrawals = Net Revenue”

The other thing we can be certain of is:

Participants in Entropia Universe can at any time request reimbursement of their unconsumed assets in the virtual currency PED. MindArk then reserves the corresponding amount in SEK as an accrual.
An accrual means they will account for it in the period it’s committed, but will pay out the actual cash in the following period. This is why it’s supposed to take 30 days on average for a withdrawal, because like most companies, Mindark operates on a monthly basis.

Some of you may already be able to see where I’m going with this. If Mindark delays the withdrawal and leaves it as “pending” it wont count against their revenues for that month. Why would they do this? Because it is possible that more money is being requested to be withdrawn than is actually being deposited. They don’t want to have a negative revenue, so instead, they simply delay the withdrawals until it can be absorbed by the money coming in.

Remember, Mindark does not operate like a bank. They are not keeping all the value of ped in their assets in the chance that we all might want to withdraw. They operate more like a retail outlet. We purchase ped, and have the opportunity to refund our ped, just like if we bought a pair of jeans from the department store. The money they would use to refund our jeans would come from the cash register, aka current revenues. But if everyone who has ever bought jeans from that store wanted to return them all at once, they would only be able to pay out what was in the register, and when that was gone, they’d say to the rest of the people “tough shit, wait til we get more money”

In any case, longer waits for withdrawals are not a good sign…

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22

…

23

Not? Would make a bank license pretty useless then, don’t you think?

This is exactly like a bank works, too - they do not keep enough cash to refund everyone’s balance at once, i guess you know that.

I think we shouldn’t panic yet: MA made a business plan for this year, and 100% sure it included the installments for the FPC sale - now these plan didn’t really work out as expected, and the current withdrawal bottleneck is a side effect of this - this doesn’t mean a thing.

24

I have asked MA for an explanation on the other forum.
Awaiting reply…

25

A bank still has the assets (loans, investments). Yes, I know a bank has to keep only a certain % for payouts, but I think you know what I mean.

MA takes money as income as soon as it is deposited and uses that for expenses, when they should take the money when it is actually spent in game. The way it seems like it works now, everyone could just deposit for some months but not play, and MA would use most of that money for expenses (most expenses are fixed, not depending on activity of players). Then if everyone tried to withdraw just the money they deposited, they would not have it.

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26

No, a bank license would be EXTREMELY useful, because then MA’s income model could change from that of a retail operation to that of a bank operation. A bank doesn’t get revenue when you deposit money. Their revenue comes from interest gained from their lending activities. And like a bank, they would be in a much better position to allow people to withdraw funds as they choose.

This is exactly like a bank works, too - they do not keep enough cash to refund everyone’s balance at once, i guess you know that.
Xen put this pretty well. If everyone at a bank tried to withdraw, they wouldn’t be able to pay everyone out either. The big “however” though is that the bank has enough in assets to cover everyone’s deposits, in addition to their other liabilities and equity. This is not the case with MA…

I think we shouldn’t panic yet: MA made a business plan for this year, and 100% sure it included the installments for the FPC sale - now these plan didn’t really work out as expected, and the current withdrawal bottleneck is a side effect of this - this doesn’t mean a thing.
You’re probably right here. While it’s not a good sign, this is mostly likely the cause of it. Their expected cash flow from SEE kind of fell on it’s face, so they probably have to go back to the drawing board to generate the lost revenue. People withdrawing funds have to suffer a bit because of it. It’s not panic time just yet, but it does create some concerns. Something to keep an eye on for sure.

27

The line you refer to was meant a bit tongue in cheek… there are of course some differences, but they didn’t show up in the post you wrote (i.e. that banks do not have to pay taxes on deposits, as the money is never really “theirs”)

Banks do have enough assets to cover everyone’s deposits?
Only in theory, or how do you think banks could go bankrupt?

Banks only need to keep a certain percentage of their customers cash (somewhere around 10% only actually), the rest is used for all kinds of business activities, partially even very risky stuff… (maybe google for “book money”).

See it like this: You deposit $1000, and the bank loans out $900 to me - if i don’t repay my loan in time, they could not satisfy a withdrawal request from you over the full amount either… even if your money is still there (in the books)

28

I’m not talking about their cash only. You’re right, much of what gets deposited goes to fund a lot of different things, and I agree that banks could engage in some risky business that could actually reduce their assets below a customer’s deposits. This would absolutely reduce what they hold in assets versus what customers hold in deposits.

But to see the mechanical differences, you only need to look at a bank’s financial statement versus one of MA’s

I’ll provide some links:

Citi First Quarter 2011 Earnings Review

Mindark Semi Annual Report Jan-Jun 2010

You see on page 2 of Citigroup’s report that their largest source of revenue comes from interest. They receive no revenue from customer deposits. This is in contrast to MA where their revenue IS deposits. This isn’t just an accounting trick at work. It actually creates a fundamental difference in their operations, and that can be seen on their balance sheets.

On page 3 of Citigroup’s report, you can see that they list the total amount of customer deposits as a liability. That amount is balanced out on the asset side. Not directly, but has been spread around many different activities. But the fact is that the bank could still afford to cover all their customers deposits, in addition to their other liabilities. Shareholder’s equity is derived from the difference between assets and liabilities so they get whatever would be left from that.

Now many people could default on their loans, which would obviously decrease their assets, but the first thing to decrease would be their equity, not the value of customer’s deposits. Since customers are a liability, they take priority over shareholders. The company would go into a negative equity situation (which could inevitably lead to bankruptcy) before any of the customer’s money is lost for good.

This is much different than MA. Our ped is not considered a liability. There is also not enough in assets to cover their liabilities, in addition to “unconsumed user holdings” which is what they list as the total amount of ped in the universe. Unconsumed user holdings does not even get factored into the balance sheet, and shareholders still have plenty of equity in the company. They have never been in a negative equity situation before because they do not count our ped as real money against their assets.

You would agree that a retail business works differently than a bank, correct? MA operates just like a retail business, and it all stems from they fact that MA counts our deposits as income, which a bank does not do. Like I said earlier, this isn’t just an accounting trick. It actually creates a fundamental difference in the operations of these two types of businesses.

Ideally, MA should have started with a bank license and then things would work they way they should for this type of game. Instead, they have to climb out of a big hole and get enough in assets somehow so that they can turn what is listed as “unconsumed user holdings” into an actual liability. The reason the bank license was denied, or put on hold was due to a lack of funding, and I guarantee you it was because they couldn’t afford to cover our ped in their assets.

29

Yes, you are right - as i said in my last post MA deposits are considered income, whereas deposits to a bank account are not.

I was only referring to what you wrote in post #21, more specifically to the part i quoted from there.
(or to sum it up again: banks take withdrawals from their 10% cash reserve, this works pretty much the same way as a store)

Being a real bank would MA allow to not deduct taxes on deposits (currently they have to, as deposits are considered PED sales), but then again, i think this doesn’t go too well with the “MA is only liable for the deposits of the last 6 month” (<- taken from the EULA, i think it were 6 month, correct me if i am wrong please)

As a bank they would be responsible for all the deposits (and everything you spend to the TT or other players would be considered money transfers/withdrawals then, no idea about TT value of items&stackables…)
If this is really true, the banking would be a big step forward for all, the players AND MindArk, but this aint gonna happen anytime soon… and somehow i got the feeling they will find a workaround for the positive effect on the liability for all the PEDs i got on my avatar…

30

Well looking at only the cash, yes that would be correct. But a store doesn’t keep the value in assets of every pair of jeans they sell, just in case someone might return them. They’re expecting that most wont return them, but they do keep some cash on hand just in case a few people do. That’s the difference. It seems we agree, but I’m just taking it one step further.

Being a real bank would MA allow to not deduct taxes on deposits (currently they have to, as deposits are considered PED sales), but then again, i think this doesn’t go too well with the “MA is only liable for the deposits of the last 6 month” (<- taken from the EULA, i think it were 6 month, correct me if i am wrong please)
I believe the “liable on last 6 months worth of deposits” is used more in the legal sense and can be viewed like a warranty on your ped. It’s reserved for if something happens to cause you to lose your ped value (computer failure, server failure, acts of God) and Mindark agrees (key phrase: “if acknowledged”) that somehow they owe you what was lost. In that case, you could only get your last 6 months worth of deposits. It doesn’t go on their books as an accounting liability, however.

As a bank they would be responsible for all the deposits (and everything you spend to the TT or other players would be considered money transfers/withdrawals then, no idea about TT value of items&stackables…)
If this is really true, the banking would be a big step forward for all, the players AND MindArk, but this aint gonna happen anytime soon… and somehow i got the feeling they will find a workaround for the positive effect on the liability for all the PEDs i got on my avatar…
It really would be a big step forward. Mindark really could then take money from decay, as they could be seen like fees on your bank account. The players’ money would be MUCH safer and better accounted for. And Mindark would no longer be driven entirely by deposits for their revenue. More deposits is good, as they could lend more, but the loot system wouldn’t need to be so heavily geared toward trying to make people deposit more and withdraw less like it is now. But I say it wouldn’t NEED to be that way. Whether or not they would actually change it is another story. It would seem like it would be good if they did though, since it’s quite obvious that not many players like current system.

The game as it is now, if no one deposits for a month, Mindark loses money. But in a game with a banking model, if no one deposits for a month or even a year or more, as long as there is money in the game, Mindark can still generate revenue.

31

Committed!

Update: Today, MA committed all seven of my pending withdrawals. The calendar days from request to committal were: 74, 69, 67, 64, 63, 61, and 51 and the business days were: 54, 50, 49, 47, 46, 44, and 38.

Thanks MA for honoring every legit withdrawal as you always have for me. Now just please work on your internal business processes (or cash flow situation) to get to the point where these only take something like 7-10 business days instead of 5 times that long. You would reap large dividends in large depositor confidence.

1 Like
32

Gz hoos.
Nice to see if worked out for you :slight_smile:

33

Gratz, I’m depositing by card right now, which is usually instant. I deposited on 12-07-2011 @ 0040 UTC. I filed a support case immediately, on non-receipt of PED and waited 19 hours for them to forward it to deposit department. 2 days, 13 hours and 35 minutes after depositing, I still do not have the PED. BUT when I filed a support case about an in-game scam, I had a comprehensive reply within 20 minutes @ 2100 UTC. :scratch2:
I’m not confident about the RCE aspects of EU.

34

I think it’s good if there is some delay so that scammers won’t be able to get their PEDs that fast.

Though, there should be standing one rule, that if you make a large deposit, you may withdraw that deposited money as soon as possible; this is to have a formal rule for someone who deposits to buy something in auction but then loses the bid war. Maybe with some limitation such as only bank deposits are eligible and you have to withdraw the money to same account (same IRL account owner), to prevent someone to deposit using a stolen CC and then immediately withdraw it to bank account.

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35

congrats on the withdraw going through. Things like this that add more stress to a players experience than nessisary. Once the withdraw process is back to running smoothly.. these space issues are worked out and the august release comes your going to see a booming economy / game again.

Arkadia is going to be born - T hunting basicly.. the rebalence of items.. the shops so that we can have a economy of better scale to work with… Things are getting better it looks.. We all just need to be patient more than ever as they work through these issues!

36

Good comment +rep
30 Bussiness day no more no less should be good…

37

So I should be hurt by some sap lending out his gear to a scammer?
If you are talking about CC-fraud, then the banks cover it not MA.
7-10 days max imo.

Its not like the poker sites doesnt have CC-frauds also but they can still do 2-3 bank days.

38

oh wouldn’t that be justice … …

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39

:censored:

40

From what I think they work (I have never used one), they use “chargeback” on same credit card that was used for deposit. That is someone with a stolen CC card can only withdraw to the same card.

What poker sites have problem with is that scammer A deposits with a stolen credit card, plays very badly on purpose (loses all the time), and scammer B at the same table wins what scammer A lost.

On the other hand (at least what I think), is thay they use software that uses heuretics to trace up players with suspicious behavior (for instance suspected botters), and the EULA on poker sites are proably way tighter than the EULA MA has (giving the poker site more rights to ban users or freeze the funds if there is as least as a suspicion).