Ukraine calls for boycott of game payment firm Xsolla over Russian operations

Ukraine's minister of digital transformation, Mykhailo Fedorov, has called for a boycott of game commerce platform Xsolla over links to Russia.

Xsolla is a payment service provider used by major companies like Epic Games, Steam, Ubisoft, Roblox Corp, and Nexon. The company says it helps its partners "easily monetize, manage, and expand" their games on a global scale, allowing them to "offload the costs, risks, and complexity of staying compliant around the world." 

Fedorov, however, wants some of Xsolla's biggest partners to cut ties with the company for continuing to do business in Russia.

"A few months after the beginning of Russia's full-scale invasion of Ukraine, the FinTech company Xsolla, whose founder is Aleksandr Agapitov from Perm (Russia) announced in the mass media the liquidation of its Russian subsidiary, Perm-based Xsolla Russia Holding LLC," wrote Fedorov in an open letter addressed to Epic Games CEO Tim Sweeney. 

"The real situation is that the company did not stop doing business in Russia. Xsolla's office in Perm continues its operations, employing more than 200 people. [...] This means Xsolla continues to pay taxes for more than 200 employees based in Russia, these taxes [are] later used to finance the Russian war in Ukraine." 

In a bid to underline the scale of the issue, Fedorov said Xsolla paid more than $2.1 million in taxes in Russia alone throughout 2022. He also alleges the company has been granted "enterprise of special importance to the Russian economy" status, which would prevent Xsolla's workers in Russia from being drafted. 

"However, the Russian government does not grant this status for simply paying taxes, including semi-official cooperation between the enterprise and the state. Such status could be obtained due to close ties with the Kremlin and certain state authorities," added Fedorov. 

Fedorov then called for Epic and other companies to "consider ceasing any business operations with Xsolla" until the company has issued a statement regarding its activity in the Russian market. "Right now your customers' money flow and support the Russian military machine, which for over a year and a half has been committing genocide in Ukraine," he said.

Game Developer has reached out to Xsolla for comment on the matter, but the company has already issued a statement to Axios to confirm it does have an office in Russia. Xsolla interim CEO Chris Hewish said the decision to shutter Xsolla's Russian holding company was never meant to imply it would be exiting the region entirely. 

"Since the war began, we relocated about 200 people [out of the region]," Hewish told Axios. "It now represents a much smaller part of the company." As for how Russia will leverage Xsolla's tax dollars, Hewish indicated it isn't for Xsolla to dictate how that cash is spent. "[Our] taxes that are going to whatever the government of that country decides to use them for," he continued. "And it becomes a pretty slippery slope when you go down that rabbit hole." 

Moving forward, Hewish said Xsolla will continue to facilitate transactions in Russia if its clients choose to serve players in the region. He added that all of its partners are aware of Xsolla's operations in Russia.