Apple chooses to make it painful for developers to use third-party payments

The App Store commission in the Netherlands for dating apps that use alternative payments is now 27% instead of the company’s usual 30% take for in-app purchases.

  • Apple has proposed changes to its App Store fee structure in the Netherlands in response to an order from the Authority for Consumers and Markets (ACM), a Dutch competition regulator.
  • Among the changes: Slashing its usual 30 percent take for in-app sales by just three percentage points, down to 27 percent.
  • Developers using alternate payment systems will need to pay a fee to their payment processor of choice, which can be up to three percent.
  • In that case, however, developers may find that the lower 27 percent fee takes them right back up to 30 percent due to payment processor fees.
  • This could be how Apple might approach the situation in all countries where they’ll be forced to allow third-party payments.

(Some) Dutch developers can now use alternative payments

It should be noted that this change to the App Store fee structure in the Netherlands only applies to the developers of dating apps. All other app categories are excluded. Apple says developers can either integrate an alternate payment system within their app or include an in-app link directing users to the developer’s website to complete a purchase.

Martijn Snoep, ACM’s chairman of the board:

Some app providers are dependent on Apple’s App Store, and Apple takes advantage of that dependency. Apple has special responsibilities because of its dominant position. That is why Apple needs to take seriously the interests of app providers too, and set reasonable conditions.

Needless to say, the company disagrees with ACM’s order and has filed an appeal. “In the meantime, we are required to make the mandated changes and are providing further details today which satisfy our legal obligations in the Netherlands while helping to protect users from these increased risks,” the company wrote in an announcement post.

Commenting on the proposed 27 perfect commission, Irish developer Steve Troughton-Smith on Twitter said that “everybody on their executive team should be ashamed.”

Other developers have shared similar sentiments.

When developers use Apple’s billing system, the 30 percent commission covers (among other things) payments processor fees. The meager three-percentage-points savings when using a third-party payment system may not be worth the effort due to other requirements that complicate the whole situation.

The devil is in the detail

For instance, as laid out in documentation available on the Apple Developer website, developers using alternate payments must submit a separate app binary that may only be distributed on the Netherlands storefront.

Apple will review this Netherlands-specific dating app to ensure it complies with the terms and conditions of the entitlement, as well as the App Store Review Guidelines and the Apple Developer Program License Agreement.

Developers must also report external sales back to Apple. The report must record each sale of digital goods and content that has been facilitated through the Dutch App Store.

This report will need to be provided monthly within 15 calendar days following the end of Apple’s fiscal month. Qualifying developers will receive an invoice based on the reporting and will be required to remit payment to Apple for the amount invoiced within 45 days following the end of Apple’s fiscal month. In the future, if Apple develops technical solutions to facilitate reporting, developers will be required to adopt such technologies.

Could developers lie about sales in reports they send back to Apple?

Please note that Apple has audit rights pursuant to the entitlement’s terms and conditions. This will allow Apple to review the accuracy of a developer’s record of digital transactions as a result of the entitlement, ensuring the appropriate commission has been paid to Apple. Failure to pay Apple’s commission could result in the offset of proceeds owed to you in other markets, removal of your app from the App Store or removal from the Apple Developer program.

Adopting third-party payments also comes with a significant overhead:

  • Developers must provide support to users regarding payment issues and refunds
  • Developers need to create a system to let users see their payment history
  • Developers are solely responsible for subscription management

On top of that, developers will need to deal with any other issues encountered when purchasing digital goods and services through these alternative purchasing methods. “You will be responsible for addressing such issues with customers,” Apple spells out.

Developers who wish to continue using Apple’s IAP system don’t have to do anything.

iDB’s take: Apple sets totally unreasonable conditions

It’s pretty apparent that the Cupertino giant is making these moves to basically dissuade developers from using alternative payment systems, not the contrary. It seems plausible that developers won’t bother because the math simply doesn’t check out.

On a macro level, this could be the playbook Apple might use everywhere it’s forced to allow alternate payments. Should the company choose to go down that route, however, it could find itself in hot waters with regulators, all over again. Read: What is Apple ID balance and how to use it

Apple is not alone in this. Another major app platform holder — Google — is also in regulators’ crosshair. According to Reuters, Google has similarly proposed a disingenuous solution that would slash its store commission by four percentage points for South Korean developers using alternative payments.