from Hacker News

What Apple Pay Could Mean for In-App Purchases

by jamesmoss on 9/10/14, 12:05 PM with 41 comments

• by PinguTS on 9/10/14, 12:41 PM

  He is wrong. In fact Apple charges the banks: http://www.bloomberg.com/news/2014-09-10/apple-said-to-reap-...

  Which makes sense, when you read the technical details published earlier today here on HN: http://clover-developers.blogspot.de/2014/09/apple-pay.html

• by mstolpm on 9/10/14, 5:23 PM

  I don't think Apple Pay will have any implications on IAP in the near future. Apple guidelines clearly show that Apple Pay is for physical goods and services, IAP for digital stuff:

  "It is important to understand the difference between Apple Pay and In-App Purchase. Use Apple Pay to sell physical goods such as groceries, clothing, and appliances. Also use Apple Pay for services such as club memberships, hotel reservations, and tickets for events. On the other hand, use In-App Purchase to sell virtual goods such as premium content for your app, and subscriptions for digital content." Source: https://developer.apple.com/apple-pay/Getting-Started-with-A...

• by EGreg on 9/10/14, 2:47 PM

  I see ApplePay and Google Wallet as the Virtualization of payment, basically turning your credit card accounts into electronic accounts with per-device and per-payment tokens. Which means that security will be a lot easier, numbers can't get stolen, and the merchant now doesn't AUTOMATICALLY get your info from your credit card, while retaining the ability to track you (probably) as long as the Payment Processors allow it.

  HOWEVER! It also means that these companies will need to integrate their new payment system deeper and make it compete with IAP on their own ecosystem. Since this system disrupts credit cards for real world purchases, it can't take a 30% cut. So you end up with two systems of payment, one which takes 30% and one which doesn't. You can bet your buttocks that publishers of online content will try to find ways to use the CREDIT CARD PROCESSING system instead of IAP, even if it means no fancy things like recurring subscriptions - things which ApplePay will have to add later. In short, Apple will have to bend over backwards to justify preserving the 30% cut on IAP. That 30% incidentally is also what keeps all apps from being free in the store - once IAP is cheap, why charge people 30% upfront for the app?

  In short, I'm interested to see how Apple is able to keep ApplePay from cannibalizing its revenue from the App Store, by disrupting its own IAP service.

• by dognotdog on 9/10/14, 12:41 PM

  The Appstore revenue is dwarfed by hardware sales, with all of Appstore/iTunes revenue being less than 10% of iOS hardware sales.

  Apple certainly doesn't NEED the 30%, but it's very doubtful they'd reduce it.

• by craigching on 9/10/14, 3:49 PM

  If you do away with 30% of IAP, then you may as well get rid of the 30% cut in the app buy itself because if IAP is basically free, no one will charge for the app and will instead monetize the app through IAP. This would arguably be a worse experience for customers IMO. And I can't see Apple letting 30% for the app buy go either.

• by Woozey on 9/10/14, 2:42 PM

  Where does it say that in app delivered digital content will be allowed to be purchased by Apple Pay?

• by janfoeh on 9/10/14, 3:45 PM

  What I would like to know is if Apple has any plans to make Apple Pay available for the mobile web?

  Implementation issues aside, I am not too hopeful on that front. Which is really a pity, because it would be so much more useful in a browser context.

  For one-time purchases I am not downloading an app, and even for shops I use regularly I overwhelmingly prefer the web, because most apps are markedly inferior to their browser cousins.

  See: Amazons Windowshop apps' lack of filtering.

• by dirtyaura on 9/10/14, 1:24 PM

  It's an interesting change for SaaS services too. For example, just a few days ago I paid for Evernote Yearly subscription through iAPs, which meant that Apple took a 30% percent cut of that $45. If Apple allows Apple Pay for SaaS subscriptions, what that will mean for iAP economy in general? Will Supercell implement a subscription service for Clash of Clans with a monthly amount of virtual currency?

• by calvinbhai on 9/10/14, 5:06 PM

  go to this link https://developer.apple.com/apple-pay/Getting-Started-with-A...

  scroll down.

  It says clearly: Apple does not charge users, merchants or developers to use Apple Pay for payments. Your credit and debit transactions will continue to be handled by the payment networks.

• by chmars on 9/10/14, 5:47 PM

  > According to Bloomberg, Apple is charging banks. > But that is coming from the fees paid to banks by > merchants, so the thesis about this being free for > both merchants and customers still stands.

  Apple is charging the banks and the banks are charging the merchants – so it is not free … and of the Apple _and_ bank fees are of course part of the customer price.

• by zura on 9/10/14, 12:42 PM

  Anyone can point to the list of supported merchant/developer countries for Apple Pay? Or is there any plans to add new countries to apple appstore?

  It is 2014 and I'm still unable to publish [any] apps on Apple app store and paid apps on Google Play... I'm based in Georgia, Europe.

• by hackerboos on 9/10/14, 2:24 PM

  So companies[1] that had to previously shut down because of the 30% can return?

  [1] - http://www.cnet.com/uk/news/as-iflow-reader-app-closes-harsh...

• by personZ on 9/10/14, 1:42 PM

  "The 30% IAP cut equals billions of dollars in yearly revenue. But being in this commission business is not in Apple’s DNA."

  I would say it is entirely in Apple's DNA. Apple has aggressively tried to inject themselves between sellers and buyers in multiple markets, even where their value add is unwanted and unnecessary.

  And I don't fault them at all for that. They're a business and they're doing what businesses do, growing revenue. Trying to get a pound of flesh from the payment industry process is something many players are aggressively trying to do right now, and Apple is no exception.

  And of course in the end all fees end up being borne by consumers.

  One fallacy that many make in such discussions is the argument that Apple makes so much from hardware they really don't care about the smaller parts of their business, yet they have shown that they care very much about it. Don't think of Apple (or Google, or Microsoft, or any other growth company) as a $N billion dollar company -- every day they are, to the people fighting for more market, a $0 company, because all that matters to the tiers and people involved is $(M-N) tomorrow.

• by Someone1234 on 9/10/14, 3:13 PM

  > It’s an uncomfortable truth, but most publishers can’t be reasonably trusted with personal information like email addresses and phone numbers.

  Citation? Anything? That point isn't well explored but it is a "truth" apparently.

• by 3pt14159 on 9/10/14, 2:40 PM

  The reason that the friction argument is bullshit is that Apple forces you to use their system. If their system truly was better, (higher conversion) then they could reasonably explain this to the people they charge.

  Another reason that 30% is BS is that it leaves no room for low margin sales. If I make an app that helps you find and buy the right computer monitor or TV, I'd have to mark it up 25% in order to break even after Apple takes it's cut.