Apple to permit the use of outside payments for the 1st time in Korea

Apple to permit the use of outside payments for the 1st time in Korea

Apple said it will comply with a ruling to allow payment systems other than its own in its App Store, according to Korea's ICT regulator.

Korea's National Assembly passed the world's first law, in September, barring app market operators such as Google and Apple from imposing a certain means of payment on app developers. The new regulation was introduced after complaints were filed over the practice of tech giants forcing their own payment systems on app developers.

Apple said that the commission rate it would impose for outside payment systems would be less than what it charges for payments made with Apple's system, which is 30 percent of the amount paid for purchasing apps, but did not present any more details.

Apple said that the commission rate for outside payment systems and when it will be applied will be decided after discussions with Korea's ICT regulator.

Governments around the world have been keenly observing the moves of U.S. big tech corporations, after the regulation was introduced in Korea. The decision to allow other payment systems on their app markets here will likely have ripple effects, possibly leading to similar policies being enacted in other markets.

Google and Apple take up most of the share of local app market. According to the Korea Mobile Internet Business Association, Google has a 66.5-percent share in the local market, followed by Apple with 21.5 percent and the local operator One Store with 11.7 percent.

But industry insiders said that the regulation will likely have little effect.

An industry official said,

"Apple will likely come up with a commission rate similar to that of Google.

"The 26-percent rate that Google has imposed for outside payments is less than the 30-percent rate it charges. But the essence of the burden for app developers is not the fee that is charged for outside payment systems,"

"App developers have to bear the costs of developing their own payment systems, and operate customer centres for possible problems that could arise. They also need to pay credit card fees."

"Taking all of this into account, it is a lot easier for app developers to use the payment systems offered by app markets such as Google's Play Store and Apple's App Store, even if they require a substantial fee."

This situation is illustrated by app developers' use of the local app market operator One Store's payment system.

One Store charges a 20-percent commission for payments via its in-house system, and a 5 percent commission for using outside payment systems. The majority of payments, however, are made via One Store's own payment system, despite the fee for outside payments being much lower.

The official said,

"The regulation therefore does not help app developers at all. It will only end up burdening app users, because app developers will reflect commissions charged for payment systems in the prices of their apps.

"But this is basically the furthest a government can regulate, given that most countries operate under a capitalist system,"

Copyright © Korea Times Co.

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