Google to allow alternative in-app payment systems in South Korea

Google will follow South Korea's recently passed laws and allow developers to add alternative payment systems to their apps.
Written by Campbell Kwan, Contributor on

An example of how alternative in-app payment systems will sit along Google's own payment system.

Image: Google

Google has announced it will comply with recently passed South Korean laws and allow Android app developers to provide alternative payment systems within apps.

South Korea recently approved legislation to require app marketplaces to allow developers to use alternatives in-app billing systems. The laws also ban app store marketplaces from unreasonably delaying the approval of apps or deleting them from the marketplace.

As part of Google's acceptance of this mandate, Android developers will now be able to add an alternative in-app billing system that will sit alongside Google Play's billing system, Google said in a blog post.

At checkout, users will be able to choose which billing system to use.

Google will still charge developers a commission if users opt to pay through the alternative billing system, however, but the fee will be slightly lower than previous rates. According to Google, the new fee is compensation for Google's role in distributing apps on Android and the Google Play Store.

"Service fees for distributing apps via Android and Google Play will continue to be based on digital sales on the platform. We recognise, however, that developers will incur costs to support their billing system, so when a user selects alternative billing, we will reduce the developer's service fee by 4%. For example, for the vast majority of developers who pay 15% for transactions through Google Play's billing system, their service fee for transactions through the alternate billing system would be 11%," Google said.

"As another example, certain categories of apps participating in our Media Experience Program, such as an eBooks provider, will pay a 10% service fee for transactions made via Google Play's billing system, but only 6% for transactions on an alternative system."

Google said the service fee would allow the company to comply with the new laws while continuing to invest in the Android and Google Play ecosystems.

When explaining the change, the tech giant also took the opportunity to say that alternative billing systems may "not offer the same protections or payment options and features". Among the features Google mentioned that may not be available on alternative billing systems are parental controls, family payment methods, subscription management, Google Play gift cards, and Play Points.

While Google has updated its developer policies as part of efforts to comply with the new laws, Apple has not made any changes to how it operates in South Korea.

When the South Korean laws were first approved, Apple publicly stated its displeasure with the new laws, saying it would put users who purchase digital goods from other sources at risk of fraud, undermine privacy protections, make it difficult to manage their purchases, and features like Ask to Buy and parental controls would become less effective.

"We believe user trust in App Store purchases will decrease as a result of this proposal -- leading to fewer opportunities for the over 482,000 registered developers in Korea who have earned more than 8.55 trillion won to date with Apple," an Apple spokesperson said at the time.

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