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Who Benefits As Apple Lets Other Payment Providers in the App Store – Business Insider


  • Apple must let dating apps in the Netherlands use other payment services by this weekend.
  • This is a first for the iPhone maker, which currently takes a 30% cut of many in-app transactions.
  • Experts share which companies will benefit from this major change to the App Store.

This weekend, for the first time ever, Apple must let outside payment providers in 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 companies. 

Starting Saturday, the iPhone maker must comply with a Dutch mandate to open up third-party payments for dating apps. Murco Mijnlieff, a spokesperson for the country’s Authority for Consumers and Markets, told Insider that Apple must indicate no later than January 15 how it will comply with the order, “subject to periodic penalty payments.”  

Although this is only a segment of apps within one country, opening up App Store payments to third-parties is a major evolution for the App Store. Apple is fighting this every step of the way, but it’s likely to happen in other countries, too. The Korea Communications Commission ordered Apple and Google in December to allow third-party payments for all apps, and Apple told the Yonhap News Agency that it respects 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 a fee for in-app transactions handled by other payment services. But that hasn’t stopped developers, payments companies and industry analysts predicting and planning new ways to take advantages of the changes.

Large app developers could save millions of dollars

Match Group, one of the largest developers of dating apps, applauded the Dutch decision and thanked the country’s regulator for “bold action” that creates a more fair app ecosystem, while urging other 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 user cheaper payments alternatives to Apple and Google, that could save millions of dollars, boosting profit margins or lowering costs for consumers, or both. 

If Apple App Store payment changes like this were imposed globally in 2022, Match Group would save as much as $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 cutting the price of their app subscriptions when non-Apple options are used. 

“The bigger implication is that as more countries allow alternative payments, that puts greater pressure on Apple and Google to allow that across the globe,” Khajuria said.

Stripe, PayPal, and Paddle are poised to benefit

Large payments companies, such as Stripe, and PayPal and its Braintree unit are well positioned to benefit, according to Ronak Doshi, a partner at research firm Everest Group.

He also highlighted Paddle, a startup that announced an in-app purchasing system in the midst of a lawsuit last year between


Epic Games

and Apple. The judge in that case ruled that Apple must let app developers steer users to alternative payment methods, although Apple appealed the ruling. 

Paddle is designing 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 lower than $10. For purchases of more than $10, it will charge 5%, plus 50 cents. That compares with Apple fees of 30% to 15%. 

“We’ve postponed our launch as Apple secured a delay on App Store changes to In-App Purchases on December 8th,” Paddle says on its website. “We’ll share an update once Apple clarifies what will be allowed (or not) regarding third-party IAP payments.”

Apple and Google may cut fees to keep the data

Doshi said the threat of new payments competition will likely encourage Apple and Google to lower their app store fees. The data on consumer buying habits is so valuable that these companies will probably keep that information flowing (and give up a few percentage points in fees), rather than hand those relationships to other companies, he explained. 

App stores are following a similar path to how finance industry rules evolved more than a decade ago by opening payment systems beyond banks, he added. 

“You’re improving competition in the market and allowing consumers to have more choice and not have any monopolistic behavior in very essential services,” Doshi said. 

Ingredients for success in this new market

Easy integration, strong documentation, good customer support, along with lower and transparent fees, are key ingredients for success in this emerging market, Doshi said. 

Arizona State University law professor Barak Orbach, who focuses on the digital economy, thinks switching payment methods will be hard because it requires 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 using Google’s payment system and prefers those offered by Shopify, Amazon and Apple.

Liesel Sharabi, director of the Relationships and Technology Lab at Arizona State University, sees App Store payment changes spurring greater innovation in the dating app industry. She cited Tinder’s in-app “coin” currency as a possible model.



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