Hub · Blog

19

Jun

“In-app” or “In an app” payments?

‘I’m building an app for the iPhone. Apple say they’re charging 30% transaction fees, so how can judo charge 2.4% + 20p? Is that in addition to the 30%?’

The short answer: The 30% charge only applies to what Apple call ‘In-app’ payments.

The slightly longer answer: If you’re selling digital goods that are delivered and consumed within the app, you can qualify for what Apple and Google call In-app payments. They can process these transactions for you with a 30% transaction fee.

If you’re selling real world goods and services, digital goods delivered outside of the app or digital goods that can be used across multiple apps, these transactions do not qualify for In-app payments, which means the 30% charge doesn’t apply to you.

If you’re selling digital goods that are consumed across multiple devices or if users can purchase the same goods outside of the app, then you’re in grey area that may or may not qualify for In-app payments.

This post aims to help you understand if In-app payments are applicable for your business.

What’s an In-app payment?

In-app payments is the way Apple and Google describe the purchasing of digital goods and services using their own product-listing and checkout systems.

We can think of ‘In-app’ payments as ‘In-Apple’ or ‘In-Android’ payments, these guys run the whole show for this type of transaction.

To accept an In-app payment you first need to list your products within Apple and Google’s software – in iTunes Connect and the Developer Console respectively.

When users wish to purchase the products you’ve listed, the checkout will then be handled exclusively by Apple or Google, for which they charge 30% of the revenue as a fee.

What can I sell with In-app payments?

Apple and Google impose strict classifications on what products can be used for In-app payment. Whilst some scenarios are not so clear cut, In-app payments must adhere to the following:

 

1. In-app payments cannot be shared across applications.

For example, if I purchase virtual poker chips in ‘The Original Poker App’ that can then only be used in that app, this can qualify as an In-app payment. However, if I purchase virtual poker chips within ‘The Brand New Poker App’ that can then also be used in ‘Just Another Poker App,’ then this cannot be an In-app payment.

Product Purchased via Used in In-app payment? Reason
Real world poker chip My app Real World Casino No Real world goods
Virtual poker chip used within a single app My app My app Yes Delivered and consumed within the app
Virtual poker chips used within multiple apps My app Multiple apps No Goods shared across multiple applications

 

2. In-app payments must be delivered within the app.

If I make a payment in an app to read news articles accessible via the app, this can qualify as an In-app payment. However, if I make a payment in an app or on a website to read news articles via the app and the website, this cannot be an In-app payment.

Product Purchased via Used in In-app payment? Reason
News articles My app My app Yes Delivered and consumed within the app
News articles My app My app and web browser No Goods are not delivered within the app
News articles Website My app and web browser No Goods are not delivered within the app
Physical newspaper with additional in-app content My app Real world and my app No Real world goods

 

3. In-app payments must be available across all the user’s registered devices. 

Apple require that ‘you must make your In-app purchase item available to all of the devices registered to a user.’

For example, if I make a payment in an app on my iPhone for a TV streaming service that I can also access on my iPad this can qualify as an In-app payment. But if I can only access that service via the purchasing device – my iPhone – this cannot be an In-app payment.

Product Purchased via Used in In-app payment? Reason
TV streaming service My iPhone app My app on iPhone and iPad Yes Available across registered devices
TV streaming service My iPhone app My iPhone app No Not available across registered devices

What’s the alternative to an In-app payment?

Here’s where it gets confusing. Technically an ‘In-app’ payment is still a payment ‘in an app,’ so it’s useful to think of other payments as ‘gateway payments.’ This term can be applied to any payment that is not processed by Google or Apple.

A ‘gateway payment’ can include: a re-direct to a card entry screen; asking your users to log into Paypal; or a payment screen integrated into your app that communicates with a third-party like judo.

Unlike ‘In-app’ payments, there are no uniform transaction fees or product restrictions to ‘gateway payments.’ It’s a varied and competitive field with different payment processors offering different strengths that may or may not suit your business.

So remember, an In-app payment is an ‘In-Apple’ or ‘In-Android’ payment used for digital goods that are delivered within the app.

To offer an In-app payment you have to list your inventory with Apple or Android, who then take care of the whole payment process for you.

Gateway payments are much less rigid and encompass a wide variety of markets and business models, with varying transaction fees and product restrictions. If anyone other than Apple or Android are processing your payments, it’s a Gateway payment.

There are some business models that don’t seem to fall into a clear payments boundary. If you’re still unsure whether or not In-app payments are right for you, get in touch so we can help you decide.


About Judopay · Judopay simplifies in-app payments, enable frictionless checkouts and intelligently prevents fraud for leading companies globally. Our payments and mobile experts help guide businesses and their development partners to create best in class apps to make paying faster, easier and more secure. Founded by serial financial technology entrepreneurs in 2012, Judopay is backed by leading venture investors and supported by banking and card scheme partners to offer in-app payments that are simple, frictionless and protected.

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