Time to bypass Apple’s in-app purchases? Court ruling makes web payments a viable alternative in the U.S.

"Is there a way around Apple’s cut of in-app purchases?" 

That’s one of the most common questions we get from our clients when building their apps. For years, app owners have had no real alternative to paying Apple’s 15-30% commission on in-app purchases (IAP) of digital goods and services if they wanted to provide the best customer experience.

To put it in real terms: We have a client planning to add in-app subscriptions for their premium services. However, these services start at $1,000 per year — so, a minimum 15% commission translates to $150 each time a subscription renews, a significant hit.

However, a recent court ruling has made web payments a viable alternative to Apple’s native in-app purchase flow in the U.S. This means potentially lower transaction fees, a welcome change for many. However, it's not without drawbacks — going outside of Apple’s commerce platform leads to additional development costs, ongoing operational costs, and potential user experience (UX) challenges.

In this post, we’ll cover the pros and cons of using web payments for iOS in-app purchases — and we’ll get into some of the implementation factors that design and development teams need to consider. 

The legal landscape: What happened?

The landscape of Apple’s App Store commerce has shifted. A recent court ruling allows developers to bypass Apple's in-app purchase system and direct users to web-based payment options. This stems from the Epic Games v. Apple case, filed in 2020, which challenged Apple's control over the App Store.

Apple initially complied with a 2021 injunction by introducing the StoreKit External Purchase Link API. However, this solution was largely ineffective for app owners and created a worse user experience for their customers. It required that they present users with "scare screens" using language dictated by Apple. These screens warned users about the risks of leaving the app and buying from outside of the Apple ecosystem, even though web payments are no less secure (when implemented properly using a payment platform, like Stripe). Furthermore, Apple still imposed a 27% commission to app owners for these off-platform web payment transactions. The transaction cost savings wasn’t enough to justify the potential drop in sales from the inferior user experience.

SOURCE: Apple

The new ruling allows app owners to guide users to external payment pages with much greater control over the user experience and in-app messaging. App owners can promote their digital goods and subscriptions in the native app flow, and then direct users to a website to complete the purchase, and then return to the app after the transaction is complete.

While Apple is challenging the ruling, Spotify has already received approval from Apple to use external payment links in its U.S. app.

Business implications: What does this mean for your app?

This ruling presents a significant opportunity to reshape your app’s business model. The most obvious benefit is potential cost savings. Instead of paying Apple's 15-30% commission, app owners could choose their own e-commerce platform, such as Stripe, and pay a transaction fee like 2.9% + $0.30 per sale.

At scale, the potential transaction cost savings can translate into increased profit margins, allowing you to reinvest in product development, offer lower prices to customers, or both. Furthermore, web payments enable you to build direct relationships with your users by controlling the payment experience. You gain flexibility in payment options, pricing models, and promotional offers.

However, it's crucial to recognize that bypassing Apple's IAP doesn’t come without cost. While the transaction fees are lower, app owners are now responsible for much more of the e-commerce experience and back-end logistics. This includes managing the entire checkout flow, handling customer support related to payments, and ensuring the reliability of all the underlying components. There are greater operational costs, including the ongoing development and maintenance, security, customer service, and potential tax and accounting implications in every country you do business.

Ultimately, this is a strategic business decision. You can stick with Apple's IAP, which offers a seamless, native experience and handles much of the e-commerce and operational burden, or you can route users to your own checkout experience, gaining more control but also taking on more responsibility and the associated operational costs. As we've heard from clients, the desire to reduce the “Apple tax” for digital products like subscriptions is a major driver for exploring these alternatives, but it's essential to weigh the potential benefits against the added complexity and responsibility.

Pros and cons: Apple IAP vs. web payments

To help you weigh the pros and cons of each approach, we've created a comparison table outlining the key differences between Apple's in-app purchases and web payments. While we've used Stripe as an example web payment solution due to its popularity and robust features, there are other payment processors available. We encourage you to research and compare different options to find the best fit for your specific needs and business requirements.

Implementation: How to set up web payments for iOS in-app purchases

If you decide that using web payments for iOS in-app purchases is the right path, here’s the specific steps your product team should follow for implementation:

1. Choose a payment processor: Stripe is a leading option, but research others to find the best fit for your needs.

2. Integrate the payment gateway: This involves working with the payment processor's API. Stripe provides extensive documentation and resources to guide you through this process.

3. Design the web payment flow: Choose between using a pre-built payment page (like Stripe Checkout) for a faster setup, or building a custom web page for a more branded experience, while leveraging the payment gateway's built-in checkout forms. Prioritizing a smooth, intuitive experience is essential to avoid losing customers. More on the UX best practices below. 

4. Map out subscription management: If you offer subscriptions, you'll need a robust system to manage recurring payments, renewals, and cancellations.

5. Ensure security and compliance: This includes PCI compliance, data privacy regulations, and other security best practices. The payment processor you choose can help with some of this.

6. Test thoroughly: Before launching, test your web payment system across different devices, browsers, and payment methods.

UX best practices: Creating a frictionless payment experience

From a UX perspective, the most important thing is to maintain a seamless experience. Users should feel like they're still within your app, even when redirected to a web page. Otherwise, you risk cart abandonment and losing in-app sales – which could offset the potential gains of avoiding Apple’s transaction fees. Here are some important principles to keep in mind:

• Transparency: Be upfront about the redirection and the benefits of paying on the web (e.g., lower prices).

• Contextual links: Use dynamic, context-aware links that take users directly to the relevant payment page. For example, if a user is viewing a specific subscription plan in the app, the link should take them directly to that plan on the web.

• Pre-fill information: If possible, ensure the user is authenticated and pre-fill user information on the web payment page to reduce friction. This could include their name, email address, and billing address, along with any other information they may have previously shared with you during usage of your app.

• Mobile optimization: Ensure the web payment page is fully optimized for mobile devices. This includes using a responsive design, large buttons, and clear typography.

• Clear calls to action: Use clear and concise calls to action to guide users through the payment process. For example, "Subscribe Now" or "Complete Your Purchase."

• Helpful error handling: Provide clear and helpful error messages if something goes wrong. For example, if a user enters an invalid credit card number, tell them exactly what the problem is and how to fix it.

• Merchandise natively: App owners now have flexibility over the text and images in the native in-app purchase flow to properly merchandise their offering. You can keep a native experience right up to the point where the user chooses to purchase.

• Avoid "scare screens": Avoid any language or design elements that might scare users away from paying on the web. Remember Apple's previous "scare screens?" Don't replicate that experience.

• Ensure accessibility: Make sure the in-app purchase experience doesn't create hurdles for any customers who rely on assistive technology. Test both the native and web payment part of the whole accessibility user journey.

• Post-sale experience: Consider the post-sale experience after the transaction is complete. You now have an opportunity to follow up with the customer directly, and redirect them properly back into the app experience in a thoughtful way.

Development considerations

From a development standpoint, implementing web payments requires a solid understanding of web technologies and payment processing APIs. Here are the most important technical considerations:

• Web + app expertise: You'll need a team with strong cross-platform technical skills — spanning app and web technology — to create the link between your app and the web payment interface. 

• API integration: Integrating with payment processor APIs can be complex. You'll need to understand the API documentation and handle various error conditions.

• Security: Security is paramount. You'll need to implement robust security measures to protect user data, including PCI adherence, encryption, tokenization, and fraud prevention.

• Testing: Thorough testing is essential to ensure that the web payment system works correctly across different devices, browsers, and payment methods.

• Ongoing maintenance: The web payment system will require ongoing maintenance and updates to address security vulnerabilities, improve performance, and adapt to changing regulations.

If you already sell digital goods and services from your website you probably have a head start on some of these items above. This should make your decision process simpler. 

Choice is a good thing. We can help you navigate app payments

The recent court ruling gives iOS app owners a choice for their in-app purchase customer experience: Use Apple's in-app purchase mechanism or leverage web payments. While web payments provide reduced transaction costs and a direct connection to the customer, they also bring operational and UX challenges. Having this choice is a win for companies, allowing them to align their app monetization strategy with their business goals and desired customer experience.

Whether you choose Apple's IAP payments or use web payments, ArcTouch can be your trusted advisor and builder. We combine deep UX and development expertise to create lovable experiences with secure payment infrastructures. As a Stripe specialized partner, we excel at implementing web payments. And we optimize in-app purchase flows for maximum conversions.

Need help navigating this evolving landscape? Contact us to discuss your options to build a successful mobile experience with digital goods and subscriptions.