- Apple must allow dating apps in the Netherlands to use other payment services by this weekend.
- This is a first for the iPhone maker, which is currently taking a 30% cut on many in-app transactions.
- Experts share which businesses will benefit from this major App Store change.
This weekend, for the very first time, Apple must allow outside payment providers access to the App Store. For now, the change is happening in a small corner of the tech giant’s mobile platform, but it has major implications and offers lucrative opportunities for a host of businesses.
From Saturday, the iPhone maker must comply with a Dutch mandate to open third-party payments for dating apps. Murco Mijnlieff, spokesperson for the country’s Consumers and Markets Authority, told Insider that Apple must indicate by January 15 how it will comply with the order, “subject to periodic fines.” .
Although this is only a segment of apps in one country, the opening of App Store payments to third parties is a major development for the App Store. Apple is fighting this every step of the way, but it’s likely to happen in other countries as well. The Korea Communications Commission ordered Apple and Google in December to allow third-party payments for all apps, and Apple told Yonhap News Agency that it abides by Korean law.
“We look forward to working with the KCC and our developer community on a solution that benefits our Korean users,” Apple said in a statement.
Apple and Google have said they will still charge fees for in-app transactions handled by other payment services. But that hasn’t stopped developers, payment companies, and industry analysts from predicting and planning new ways to take advantage of the changes.
Big app developers could save millions of dollars
Match Group, one of the biggest dating app developers, applauded the Dutch decision and thanked the country’s regulator for the “bold move” that creates a fairer app ecosystem, while urging others regulators to implement similar laws. “Despite global scrutiny, Apple continues to abuse its dominant position, imposing unfair policies that harm app developers, entrepreneurs and, most importantly, consumers,” Match said in a statement.
Consumers spent more than $133 billion on app-related purchases last year, SensorTower estimates. If developers are free to use cheaper payment alternatives to Apple and Google, it could save millions of dollars, increase profit margins or reduce costs for consumers, or both.
If such Apple App Store payment changes were imposed globally in 2022, Match Group would save up to $215 million a year, RBC Capital Markets estimated in September. Bumble, another dating app company, would save up to $55 million a year, the brokerage firm calculated.
Shweta Khajuria, an analyst at Evercore ISI, said dating apps like Bumble and Tinder could incentivize consumers to use third-party payment options by lowering the price of their app subscriptions when non-Apple options are used.
“The biggest implication is that as more countries allow alternative payments, it puts more pressure on Apple and Google to allow this globally,” Khajuria said.
Stripe, PayPal and Paddle are about to benefit
According to Ronak Doshi, partner at research firm Everest Group, large payment companies, such as Stripe, PayPal and its Braintree unit are well positioned to benefit.
He also pointed to Paddle, a startup that announced an in-app purchase system amid a lawsuit last year between
and Apple. The judge in that case ruled that Apple should let app developers direct users to alternative payment methods, though Apple appealed the decision.
Paddle designs this product to work specifically on Apple’s iOS mobile operating system and pitches it as a direct competitor to Apple’s payment system. The startup plans to charge a 10% fee on transactions under $10. For purchases over $10, it will charge 5% plus 50 cents. This compares to Apple’s 30% to 15% fee.
“We postponed our launch because Apple got a delay on changes to the App Store for in-app purchases on December 8,” Paddle says on its website. “We will share an update once Apple has clarified what will be allowed (or not) regarding third-party IAP payments.”
Apple and Google could reduce data retention fees
Doshi said the threat of new competition in payments will likely encourage Apple and Google to cut their app store fees. Data on consumer buying habits is so valuable that these companies will likely continue to pass this information around (and waive a few percentage points in fees), rather than outsource these relationships to other companies, he said. -he explains.
App stores are following a similar path to the evolution of financial industry rules more than a decade ago in opening up payment systems beyond banks, he added.
“You improve competition in the marketplace and allow consumers to have more choice and not have monopolistic behavior in very essential services,” Doshi said.
The ingredients for success in this new market
Easy integration, solid documentation, good customer support, as well as lower and transparent fees, are key ingredients for success in this emerging market, Doshi said.
Barak Orbach, a law professor at Arizona State University who focuses on the digital economy, thinks switching payment methods will be difficult because it will require convincing consumers that new payment services are secure.
Consumers have biases — not necessarily rational ones — when it comes to payment providers, he noted, while admitting he’s personally less comfortable with Google’s payment system and prefers those on offer. by Shopify, Amazon and Apple.
Liesel Sharabi, director of the Relationships and Technology Lab at Arizona State University, sees the App Store’s payment changes spurring greater innovation in the dating app industry. She cited the “coin” currency built into the Tinder app as a possible model.