Google Play set to allow dual billing for digital in-app purchases — but will Apple follow suit?

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Google Play has announced that it will start letting developers process payments for in-app purchases and subscriptions using other payment methods — and eyes have now turned to Apple to see what its move might be.

Both Google and Apple require app developers to use Google Pay or Apple Pay (or Apple ID) payment systems to make purchases for digital products or services in apps — which includes everything from game assets to digital products such as ebooks and subscriptions.

The practice is known as “dual billing options.”

The rule generally does not apply to the purchase of physical goods, however.

A good way to compare this is that Amazon can sell physical items, such as cleaning products, printed books and electronics via its apps and process the payment for these orders on their own (of course, they have the option to integrate with Apple Pay too, though Amazon doesn’t) all within their native apps.

However, when it comes to Amazon’s digital book brand Kindle and audiobook service Audible, those aren’t available for purchase via apps because Amazon has decided not to use Google or Apple’s payment processing services.

Amazon can list Kindle downloads and prices in its apps but there’s no “add to cart” button and users see a rather vague message that says “this app does not support purchasing of this content” but is quick to point out that Kindle content can still be read on the appropriate mobile apps on the same device.

In iOS, it notably doesn’t even give clear instructions on how to buy the Kindle book.

One workaround Amazon appears to have developed is to let users send a free sample of the book to their Kindles or the cloud reader. Since it’s free and no payment is collected, this essentially gets around the ban on using third-party payment processing to sell digital items.

This also appears to be a sort of backdoor way of creating a cart and helps users remember items they want to buy — but they have to find their Kindle, look for the sample and then buy it there.

Other companies selling digital content don’t even allow for shopping on their native iOS or Android apps and only market these as a way to let users browse and enjoy content they’ve bought on another device.

The change also has implications on digital media companies who sell subscriptions to content directly in their apps, which fall under the digital content category and are subject to having a percentage held back by Google or Apple — which can be as high as 30% depending on the platform and volume of payments processed.

Streaming services, which are considered digital, also fall under this rule.

It’s worth noting, however, that Apple and Google only block payment processing within native iOS or Android apps. Consumers are technically still free to sign in to their accounts via the mobile web — such as on Safari or Chrome — and add digital goods to their cart and pay that way, assuming the company’s mobile site supports it.

This method can also be used to enroll for streaming services and digital subscriptions as long as it’s supported via web browsers.

However, critics say that’s confusing because many users expect native apps to be feature-rich only to run into a wall when they try to buy digital content.

Others claim the limitation is silly because it’s only in place so Google and Apple can generate more revenue and there aren’t many practical reasons to lock down payments, especially as the line between digital platforms continues to blur.

Most companies that don’t use Apple and Google’s in-app payment processing for digital goods say it’s simply not economically feasible to do so because of the cut the companies take, which covers credit card processing fees but also includes a “commission” for Apple or Google. That may or may not be true in all cases and it would require inside knowledge of profit margins, expenses and other financials to know for sure.

It’s not immediately clear what payment options Google will allow or how they might be implemented. The company has also made it clear that it plans to still take a cut of the products purchased, though that rate hasn’t been announced. It does appear that it will be less than the current rates.

Google says it will start testing this option with Spotify. Streaming music has notoriously slim margins so even a 15% cut would likely be too much for Spotify to fork over and still make money. For its part, Google is signaling that rates may be up for negotiation, though it’s not clear if that’s something only big brands could take advantage of.

Both Apple and Google have been pressured by consumers looking for a cleaner purchasing process and app developers wanting to make it easier for users to buy digital content while also not making their business models unrealistic. What may be the ultimate breaking point, however, is that the practice is attracting the attention of lawmakers around the globe.

In fact, South Korea passed a law that would ban this type of arrangement altogether and Google appears ready to fall in line with its announcement while Apple says it’s still going to continue forward with an appeal there.

At stake is potentially billions of dollars in revenue to both companies. The fees are believed to contribute significantly to their profits, mainly because they are able to sit back and collect up to 30% of all payments for digital products when doing so has significantly lower costs to them.