.svg)
Apple has opened up its App Store in South Korea to alternative payment processors, but for developers who want to opt into the scheme, they will still be charged high commission rates.
In August last year, through an amendment to its Telecommunications Business Act, South Korea mandated that apps distributed within the country be allowed to offer an alternative in-app payment processing option.
Dubbed by South Korean media as the "Google power abuse prevention law", the amendment was designed to break up the monopoly on in-app purchases enjoyed by Apple and Google.
As VIXIO reported in January this year, Apple fought and lost a similar battle against regulators in the Netherlands, following a lawsuit from Match Group, owner of Tinder and other dating apps.
Google is also facing similar lawsuits from Match Group in the Netherlands and California.
South Korea was the first country to legislate against bigtech’s privileges in the in-app payments market, but it took Apple until last week to launch its new third-party functionality for in-app purchases.
For developers who wish to use a third-party payment option in South Korea, they will first need to submit a new version of their app to the App Store, using a feature known as the StoreKit External Purchase Entitlement.
Those who do so will need to enable the entitlement in Xcode, use required StoreKit APIs, and submit a separate app binary for iOS and/or iPadOS that is distributed solely on the App Store in South Korea.
Apple will then review this South Korea-specific app to ensure it complies with the terms and conditions of the entitlement, the App Store Review Guidelines and the Apple Developer Program License Agreement.
Other developers who wish to continue using Apple’s in-app purchase system may do so, and for them no further action is required.
“If you’re considering using this entitlement, it’s important to understand that some App Store features, such as Ask to Buy and Family Sharing, will not be available to your users, in part because we cannot validate payments that take place outside of the App Store’s private and secure payment system,” Apple said in a statement to developers.
“Apple will not be able to assist users with refunds, purchase history, subscription management, and other issues encountered when purchasing digital goods and services through an alternative purchasing method. You will be responsible for addressing such issues.”
But despite losing out on such protections, users of third-party payment providers must still pay a 26 percent commission on all in-app transactions, gross of any value-added taxes.
As noted by Apple, this is a reduction from its usual 30 percent commission in other markets, and is also 1 percent less than the rate it agreed to with Dutch regulators in February this year.
Other requirements for third-party PSPs
In South Korea, developers using the entitlement programme will be required to provide a report to Apple recording each sale of digital goods and content that has been facilitated through the App Store.
This report will need to be provided monthly within 15 calendar days following the end of Apple’s fiscal month.
In the future, if Apple develops “technical solutions” to facilitate automatic reporting, it said that developers will be required to adopt such technologies.
Apple also noted that it retains audit rights that will allow it to review the accuracy of a developer’s record of digital transactions as a result of the entitlement.
If a developer fails to pay commission to Apple, it could result in the offset of proceeds owed to the developer in other markets, removal of the app from the App Store or removal of the developer from the Apple Developer programme.
Apple has also limited the choice of third-party payment service providers (PSPs) available to developers in South Korea.
At present, the only PSPs that are approved by Apple for this purpose in South Korea are KCP, Inicis, Toss and NICE.
However, if a developer wants to use a different PSP, the PSP’s name and website information can be submitted to Apple for consideration.
Before an entitlement can be assigned, Apple will need to verify that each PSP meets the criteria of having a secure payment processing system and an established track record of protecting user privacy, including through fraud prevention services.
