Avoiding Apple's 30% Commission on In-App Purchases
Claiming 54% of market share of mobile operating systems in North America and 29% of mobile users worldwide, Apple's iOS is usually the first and most critical mobile experience that brands develop apps for. Historically, iOS has used their monopolistic control over this platform to force companies to pay a 30% commission on all purchases made within iOS apps, while also barring brands from using data gleaned from the app experience to promote any external payment mechanisms which could potentially circumvent that commission.
Thankfully, that’s changing—thanks to a settlement related to an antitrust lawsuit brought against the tech giant in 2019.
As a result of the settlement, businesses can now encourage users to make purchases using alternative payment methods, so long as those promotions occur outside of the iOS app. For example, a brand can now collect a user’s email address within the iOS app, and then use email to encourage the customer to transfer their subscription to a direct payment between the user and the brand, instead of using Apple’s payment system as an intermediary. This is a huge opportunity for brands and consumers, as it can save brands up to 30% in commission fees and allow them to offer more competitive pricing to consumers.
There are a few additional wins for brands stemming from this settlement. First, US iOS developers who generate less than $1 million per year from App Store sales may be able to claim anywhere from $250 to $30,000—depending on their specific circumstances—from a $100 million Small Developer Assistance Fund that's being created as part of the class-action settlement. Second, Apple has said it will not raise its 15% commission charged to the company's Small Business Program participants for the next three years.
Direct Payment Promotions: How to Avoid Apple's 30% Fee on In-App Purchases
Now that Apple has lifted the prohibition on communicating with iOS customers about alternative payment options outside the app via out-of-app channels, such as via email or SMS, brands that collect customer contact information within their mobile apps have exciting new options to optimize revenue and pass along savings to consumers. This new change means that it's all the more important for marketers to incentivize customers to opt into cross-channel communications, such as agreeing to receive text messages or emails.
Brands can do this using in-app lead capture forms for email or SMS. Curious what that looks like in practice? Here's an example of a brand using both email and SMS to incentivize users to pay for their subscriptions outside of traditional app store payment options.
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