Nearly every app developer has heard about payments outside of stores’ billing systems following the loud Epic Games vs. Apple lawsuit, but few are aware of the implications its aftermath has had for one’s mobile app business.
While a lot of enterprise-size mobile app developers are already implementing alternative ways to collect payments for their digital content, mid-sized developers are yet to get more closely familiar with the matter.
Hence, I wanted to shed more light on the opportunities that exist for one to boost their app’s revenue.
Firstly, let me stop on why this is worth closer consideration at all.
According to Coalition for App Fairness, a non-profit organization advocating for the interests of mobile developers: “For most purchases made within the App Store, Apple takes 30% of the purchase price. No other transaction fee — in any industry — comes close. This app tax cuts deeply into consumer purchasing power and developer revenue”.
Unsurprisingly, mobile developers around the world have voiced concerns about the 30% fee being levied by the Stores, as keeping these hard-earned revenues would have helped them scale beyond where they are today and attract new users with the lower price point.
Yet, even today, there are 3 primary options for how one can compliantly collect payments outside of the App Store and Google Play ecosystems:
1. Web/PC payments for cross-platform applications
For apps where the user also has access via a web or a desktop version in addition to the mobile app, one is able to collect payments on the web while they’re reflected in one’s mobile account as well.
2. Top-up page
For those apps that only have a mobile version there is a solution as well: one can simply create a top-up page where the user would go and purchase in-game items or tokens, which will then be reflected in one’s mobile account.
You can see how enterprises like Netease (Netease Games Club), Supercell (Supercell Store), and Wildlife Studios (Warmachines Store) are already driving this trend.
3. Alternative in-app billing
In the markets like South Korea, the Netherlands (dating apps only), and recently India, local regulators have imposed requirements on app stores to enable developers to collect payments in-app via outside payment service providers.
The challenge with using this method is in having to still pay a substantial commission to stores, albeit with a discount of 3-4%.
The regulatory landscape around the world is evolving towards further disintermediation of the Big Tech monopolies, and we will keep seeing major regulatory interventions in the space.
In the past, the primary question was how to let the users know that there are alternative ways to pay and how to collect their contact information to reach out and incentivize them to use alternative payment channels.
Following the update of App Store Review Guideline 3.1.3 and 5.1.1. (x), this is now solved. Yet, the major regulatory breakthrough so far has been the EU Digital Markets Act (DMA).
DMA will officially require “Gatekeepers” to allow the use of third-party payment platforms among many other regulatory breakthroughs, which they will have to comply with by March 2024.
So now, should every mobile app developer create a top-up page and start collecting the payments outside of the App Stores?
Well, this is largely dependent on whether your total volume of revenue is already sizeable enough to prioritize cost optimization vs. continued focus on growth.
If you do, using alternative payment channels can reduce your fees by as much as 95% depending on the country and payment method, saving you millions in app store fees.