Triumph in adversity: the desirability of Apple’s payment system

Every business owner accepts that they sometimes have to swallow disappointment and prepare for inevitable change, which seems to be what Apple is preparing for in terms of App Store payments. And that can trigger a new opportunity as it is.

Open App Store Payments

Apple is under such pressure when it comes to App Store payments. It has made many arguments to justify why its own payment systems should be mandatory on App Store sales, but courts in South Korea and the United States disagree. The company continues to face regulatory investigations in several countries.

To keep developers happy, Apple continues to tweak how its systems work, including cutting commissions from 30% to 15% for most developers and promising to let developers come up with other ways to pay. But the demand for support for external payment systems remains.

Primarily, competitors, developers and reviewers want the company to allow customers to purchase digital products using payment systems other than its own.

Test case: South Korea

In South Korea, a law now requires all App Store platforms to support multiple payment systems. In a recent statement, Apple said it would comply with the law, issuing a statement in which it said:

“Apple has great respect for Korean laws and a solid history of working with the country’s talented app developers. We look forward to working with the KCC and our developer community on a solution that benefits our Korean users.

“Our work will always be guided by making the App Store a safe and trusted place for our users to download the apps they love.”

Apple hasn’t explained how or when it will support alternative payment systems, but apparently has filed a plan with South Korean regulators.

Online reports suggest that under these proposals, the company will still charge a commission on these sales. This commission is justified by the indisputable fact that if Apple did not build and develop its platforms, there would be no business opportunity available in the first place.

Even shopping malls charge brands for storage space based on the same logic. The only big question remains as it always has been: what level of fees is acceptable. The next question will be to ensure that the same fees are levied on all platforms.

What will Apple do next to protect App Store activity?

Apple will want to make sure that, given the choice, consumers will always prefer its own payment systems to alternatives. In this context, the most obvious strategy is to offer a payment system that is simply better than all the alternatives.

The secondary challenge is that in doing so, the company cannot be seen as exploiting its control of the software and the platform in such a way as to give its payment system a substantial advantage, as this would be anti-competitive.

However, competition law goes both ways, which also means third-party systems have to work hard to become as transparent as anything Apple provides.

After all, simply providing better service based on the same available opportunity is precisely the free market advantage that competitors say they want. Apple’s payment system simply revolves into Apple’s payment product.

Would Epic be able to justify refusing to allow optional Apple Payments in its own stores? It’s such an obvious potential consequence that it’s logical to think Apple’s management considered it more than not.

The long game? It’s all about the money

Apple announced yesterday that its developers had taken $ 260 billion from App Store sales since the store launched in 2008. This large number followed a very large year of sales on the App Store. is up $ 60 billion in the past 12 months.

(This even takes into account changes made to the Developer Commission by Apple during that time.)

So, right now, developers are making around $ 5 billion per month, which surely suggests that they will have little interest in changes that might damage this profitable environment.

While there is a certain irony in Apple being forced to compete with others on its own platform, that irony cuts twice as much if it then chooses to compete elsewhere. After all, given that some payment systems are considered less secure than others, Apple could turn the emancipation of payment systems from the App Store into a great opportunity to tap into an even larger market by transferring its own payment systems on competing platforms.

Please follow me on Twitter, or join me in the AppleHolic’s bar & grill and Apple Discussions groups on MeWe.

Copyright © 2022 IDG Communications, Inc.

About Matthew R. Dailey

Check Also

Contactless Payment Transactions Market Size, Share, Trends, Outlook and Forecast by 2029 – SMU Daily Mustang

New Jersey, United States – The Contactless Payment Transactions Market report includes the upcoming challenges …