The Benefits of New In-App Payment Regulations for App Developers

New regulation will allow app developers to offer a different payment system "of their choosing" and give users a choice between an alternative payment system and billing system. This will provide app developers and publishers with more control over the checkout experience and ways to improve conversion rates. In addition, using third-party payment providers could increase margins as app developers can retain more income from their app sales, or pass on the savings to customers.

Regulations already driving change

There is a wave of significant new regulations around digital marketplaces coming into force around the world. South Korea and India have blazed the trail and are already pushing the dominant app store owners to offer alternative payment options for in-app purchases. This means that developers serving users in these markets can now choose to implement third-party billing systems, effectively enabling them to handle users’ in-app payments directly.

Perhaps the most significant regulatory change came into effect at the end of 2022, when the EU implemented its Digital Markets Act, which enables third-party payment providers to enter the digital app domain. This act will start to be enforced in 2024, with large fines (up to 10 percent of global revenue) for companies that fail to comply.

In response, the app store owners are beginning to soften their stance on digital in-app purchases.

Both Google and Apple have announced several changes to the rules for their in-app billing system in certain countries across Asia and Europe. Developers now have varying degrees of flexibility in offering customers a choice when paying for in-app digital goods and services.

They have also started to reduce their fees to developers, so far by 4-5%.

Google is piloting its alternative billing programs globally to explore offering this choice to more users.

These regulatory changes mean it could be time for app developers and publishers to swing into action and take control of their in-app payments.

Why offer third-party in-app billing?

It may seem a little daunting for some developers – small ones in particular – to make the leap through this new gate in the in-app paradigm. However, for mobile app developers and publishers of all sizes, there are some significant benefits to adding third-party billing:

• Increasing margins – with lower and fewer, fee payments to app stores, developers can retain more income from their app sales, or pass on the savings to customers.
• Providing a custom checkout experience – developers will have more control in the design of the checkout experience, which connects with transaction use cases and their brand identify.
• Empowering users with payment choice – users can choose to pay via third-party billing or in-app billing via app stores. With third-party billing, users can select their preferred payment methods, including popular local payment methods, increasing conversion rates and satisfaction.
• Offering subscription management – developers can offer their users the ability to manage their subscriptions directly with them – in the app or via a web browser. This provides greater insight into the customers’ decision journey, creates upselling opportunities at the right moment in time, and helps rescue revenues before customers churn.
• Improving customer engagement – when customers pay developers directly, developers can handle customer requests such as refunds directly, keeping user engagement and satisfaction high.

Of course, the end-user experience will vary according to the specific app store requirements of the jurisdiction, and how developers implement third-party billing. However, overall, developers will be able to offer their own flexible, secure checkout experience, just as with many non-digital in-app billing systems.

How can app developers test the waters?

With several geographies already opening up their digital goods and services marketplaces, mobile app developers already have the option to test the waters for third-party in-app billing.

In markets where third-party in-app payment systems are already available (such as South Korea and India), developers might consider testing alternative payment systems with their customers straight away. Even if this is not the primary market, it will provide developers with valuable lessons before they roll out other markets.

Developers selling mobile apps in the EU can start evaluating the option of switching to alternative payments, while waiting for the app stores to publish detailed guidelines. Here, an independent payment service provider like Worldline can keep developers abreast of important updates and help them prepare accordingly. We can also help developers evaluate the opportunities for selected titles and markets, and carry out testing, so that they have the necessary insights required to make accurate assessments.

Other jurisdictions, like the USA, are in the preliminary stages of transforming the landscape of in-app payments. Worldline will keep developers up to speed on the status of mandated changes in these markets.

Get a head start with Worldline

Worldline can offer a head start to developers considering offering third-party in-app billing to users. We have mobile Software Development Kits (SDKs) that offer fast and secure integration, and which can be optimised for the best user experience.

Our iOS and Android SDKs offer the backend logic for native payments. They have the built-in logic needed to offer users the payment products they prefer. There is also an out-of-the-box sample app, which can be styled according to developer needs to help reduce development time. For developers that want to add browser-based payments to their apps, Worldline has the MyCheckout hosted payment pages.

For developers, Worldline makes it easy to integrate new in-app payment options, and offers a wealth of knowledge and expertise to guide them through the changing regulatory environment.

To find out more about our offerings for alternative in-app billing, please send an email to WL-marketing@worldline.com.