The trend of paying using mobile phone has increased dramatically with the advancement of technology in recent years. In this article, you will find out about the difference between terms such as 'Mobile Payment' or 'In-App Purchases' and the benefits of making payment using these methods.
There are many ways to pay with a cell phone: contactless payment via NFC (Near Field Communication), the purchase of digital products within an app or the acquisition of a material product or service through an app - you can quickly lose track of things. How do the options work and which options are suitable for you as the
app developers?
In-app purchases
In-app purchases are purchases of digital content and consumer goods within apps. These include premium functions such as an ability that gives you more power in a game, virtual money that can be used for purchases, or an ad-free version of your app. The purchases are processed via the respective app store, where the user has stored his payment information. Apps that offer in-app purchases can usually be downloaded free of charge. Developers then receive 70% from the sale of this additional content. Apple and Google both keep a 30% commission.
Apple and Google make a difference for subscriptions that have been paid for longer than twelve months. The service fee is then reduced to 15% for the subsequent period and developers earn 85% of sales.
Exception: Spotify
Although apps like Spotify or Amazon also sell digital products or subscriptions (such as music or streaming video content), no commission from Apple is withheld.
Why?
The purchase of these premium functions is only possible outside of the apps. With this method, music / video streaming providers avoid the fees for in-app purchases. However, no links or references to the purchase website may exist in the apps themselves. However, it is allowed to point this out in the app advertising.
Sale of physical goods and services in apps
In contrast to in-app purchases, the sale of material products and services in applications is not subject to Apple or Google's fee obligation. In this case, goods or services can be the sale of clothing, the delivery of food or the ordering of a ticket for local transport.
Mobile payment
Mobile payment is a service that makes it possible to make contactless payments with a smartphone or smart watch. This makes it possible to pay at supermarket checkouts, in hotels or restaurants, in local transport, but also in smaller shops. The device must always be NFC-capable. To use mobile payment, the user must either install and use a banking app from their bank or a payment app from providers such as Google or Apple.
Google and Apple Pay
Apple Pay for iOS and Google Pay for Android are mobile payment services, so-called wallets, which provide the smartphone with the additional function of a wallet. For this purpose, users enter their credit or debit card in the applications. With these, it is now possible to pay locally on the go. Both services are also used in places in apps or on the web as a payment method.
Why is it worth offering payments in apps?
1. One of the simplest and fastest payment methods: there are fewer abandoned purchases due to the faster payment process
2. Trend is increasing: The number of mobile payment users has increased significantly in recent years and will continue to grow according to the trend.
3. More secure than paying with a card: tokenization is used in mobile payment. The specified credit or debit card information is encrypted and replaced with tokens. Since this token is not the real card number, it is useless for attackers. If the smartphone is stolen, the payment process can be deactivated quickly and easily. The card does not have to be blocked for this.
4. Mobile payment users spend more money: A survey of 25,000 consumers in five countries showed that users of mobile payment spend up to 60% more money. Users spend more than twice as much on digital channels and tend to shop more often.
How can you use these advantages now? Shop owners can buy an NFC-enabled terminal, or design their own app in which the payment of products or services is possible.
But how does the integration of these payment methods work?
PSP (Payment Service Provider)
The easiest way is to invest in the services of a PSP.Payment service providers are companies that provide payment methods such as VISA, PayPal, wallets such as Google or Apple Pay for online shops, apps and brick-and-mortar stores and handle customer payments. For app development, they provide software development kits (SDK) with which developers can integrate mobile point of sale (PoS) solutions into the apps.
