Apple to Collect 27% Commission on Third-Party App Payment Systems in the Netherlands

[MacRumors]

Apple says it will take 27% commission on purchases made in dating apps through third-party payment options in the Netherlands, in compliance with a Dutch regulatory ruling.

In an update on its developer support site, Apple said it would collect 27% commission instead of its usual 30% on transactions made in dating apps that use alternative payment methods. Apple says the decreased commission excludes the value for collection and remittance of taxes that the company carries out.

Consistent with the ACM's order, dating apps that are granted an entitlement to link out or use a third-party in-app payment provider will pay Apple a commission on transactions. Apple will charge a 27% commission on the price paid by the user, net of value-added taxes. This is a reduced rate that excludes value related to payment processing and related activities. Developers will be responsible for the collection and remittance of any applicable taxes, such as the Netherlands' value-added tax (VAT), for sales processed by a third-party payment provider.

The details follow Apple's announcement last month that it will comply with a Netherlands Authority for Consumers and Markets (ACM) ruling that compels the company to allow third-party payment services to pay for in-app purchases in dating apps.

Apple has warned that it will not be directly aware of purchases made using alternative methods, and will not be able to assist users with refunds, purchase history, subscription management, and other issues that it usually takes care of as part of its own in-app payments system.

As a result, developers who use the new entitlements will have to take on these additional responsibilities, and will be required to provide Apple with a monthly record of each sale of digital goods and content through the App Store within 15 calendar days of the end of Apple's fiscal month.

Apple's concessions came following a December ruling from the ACM that, by restricting dating apps from using third-party payment methods, Apple is engaging in an "abuse of market power." The ACM threatened to fine Apple up to a maximum of 50 million euros per week ($57 million) if it did not allow dating apps to offer alternative payment options.

Despite agreeing to offer the entitlements, Apple is still appealing the ACM ruling, which it argues is not in the best interests of App Store users. Apple says it is "concerned these changes could compromise the user experience, and create new threats to user privacy and data security."

Article Link: Apple to Collect 27% Commission on Third-Party App Payment Systems in the Netherlands

 

[DarkAeneas]

Oh boy, still 27%, this will not land well with anti-monopolists and legislators

 

[Brian Y]

Lol that's ridiculous.

At least they're kinda admitting here that 3% is the actual cost.

That last line should be changed to "create new threats to our bottom line".

 

[TheOldChevy]

This is an interesting evolution.

 

[draugminaion]

It will be interesting to see what's next. Will the authorities determine that 27% per transactions is too much? Based on what? If they do, will Apple start charging for hosting, downloads, app review, use of the development tools, etc. to get the rest of their fees?

 

[Michael Scrip]

All this time they were fighting for "alternative payment systems"

Turns out they should have been fighting for "lower commission fees"

I'm guessing more lawsuits are coming. Grab your popcorn!

?

 

[draugminaion]

Lol that's ridiculous.

At least they're kinda admitting here that 3% is the actual cost.

That last line should be changed to "create new threats to our bottom line".

No, that is not the actual cost. That's just payment processing. Apple needs about 8 billion to run the App Store, that needs to come from somewhere. Are the authorities going to outlaw profit?

 

[elvisimprsntr]

My answer.

1. Don't use apps/services that use third party payment systems. Having my credit card number floating around in more places on the internet does not seem like good OPSEC.
2. Assuming Apple will be forced to offer side loading apps, don't side load apps from third party sources. Not unless you like having your device compromised and personal information stolen.

Sure, Apple isn't perfect, but using third party payments and apps stores is akin to the Wild West. Android is a prime example. https://www.androidheadlines.com/2016/01/third-party-app-stores-blamed-for-malware-infections.html

If you don't like Apple's closed ecosystem, you are free to switch to Android. I think governments time would be better spent on solving corruption, embezzlement, drugs, and providing social services to its citizens. Unless of course government officials are the ones committing crimes and they are just using this as a way to deflect attention away from the real problem.

 

[neuropsychguy]

Lol that's ridiculous.

At least they're kinda admitting here that 3% is the actual cost.

That last line should be changed to "create new threats to our bottom line".

3% is about the cost to process credit cards, which is why Apple reduced the commission by 3%.

 

[TheYayAreaLiving 🎗️]

It just shows you Apple is going to get their cut no matter what happens. Every dollar counts.

 

[Maximara]

Oh boy, still 27%, this will not land well with anti-monopolists and legislators

The apple insider version of this reveals two things that are a real sting in the trail:

Apple further explains that a condition of using alternative payment systems s that developers will be required to report sales — and that Apple has audit rights.

"Failure to pay Apple's commission could result in the offset of proceeds owed to you in other markets," continues Apple, "removal of your app from the App Store or removal from the Apple Developer program."

So this basically results in what I predicted both here and there - it will make the developer's life more difficult.

Funny thing. Yahtzee just dumped on the entire mobile game market (Odds are he uses Android):

"Today, there’s only a few games I play on my phone. Solitaire, crosswords, Picross-style puzzles. Mainly because each round of such games usually takes a while so I don’t get constantly deluged with ads. Most of the games I try on a whim because the ads made them look sorta fun are based around very short levels so that ads can be plugged in at the start and end of each one. Levels usually of some mindless but viscerally satisfying task like sorting coloured balls. And all the ads that bookend them seem to be for an infinite number of games with slight variations of the same thing and almost no theming to speak of."

 

[DarkAeneas]

No, that is not the actual cost. That's just payment processing. Apple needs about 8 billion to run the App Store, that needs to come from somewhere. Are the authorities going to outlaw profit?

If they consider it monopolistic profit, yes

 

[draugminaion]

It just shows you Apple is going to get their cut no matter what happens. Every dollar counts.

Yes.
Next step might be 27% per transaction is considered too high.
Then they will lower that and get paid by charging for Xcode, hosting, downloads, app review, etc.

 

[Maximara]

3% is about the cost to process credit cards, which is why Apple reduced the commission by 3%.

You forgot the "if you have good credit" for that 3%. Not all developers are going to qualify for that rate and if they are in markets credit card companies really nervous about it can be much higher:

For example, here is what one company says in its promotion: "the average rate is about 4.5% + 23 cents (USD) per transaction, but actual rates will depend on years in business, volume and other factors". If you could get "up to 3.5%" (ie 3.5% or less) why would anyone with any kind of business savvy use this company?

Here is what another company claims "Expect to pay as much as 10%-12% per transaction and 50% more for monthly fees with a high-risk merchant account compared to a standard one. (...) Don’t sulk at rates of 4.5%, 7.5%, 10% or even 12% if down deep in your heart you know this is the only option." Again, if you could get "up to 3.5%" (ie 3.5% or less) why would anyone with any kind of business savvy use this company?

More over according to Google "You can expect to pay on average ~$100 per month for a high risk merchant account, on top of a $500 credit card merchant fee to Visa and MasterCard, EACH, on top of potential sign up or start up credit card processing fees." (Nov 14, 2019)

Elsewhere "Computer Software" along with "IT Services" are labeled as "high risk". Yet another site has this:
Low risk:
*Average monthly sales volume less than $20,000
*Average credit card transaction less than $500
*One currency accepted
*Doesn't offer recurring (subscription) payments
*Not on on MATCH list/history of excessive chargebacks
*Main product offering: books, office supplies, clothing, home goods, etc
High Risk:
*Average monthly sales volume over $20,000
*Average credit card transaction over $500
*Multiple currencies accepted
*Offer recurring (subscription) payments
*Placed on MATCH list/history of excessive chargebacks
*Main product offering: software, digital, tickets, seasonal items, etc.

Sure the big players are likely get 3% but the average small developer these laws are supposed to help? Highly unlikely. So the big boys will likely create stores of their own and the small developer will be in a worse place and the consumer will likely have a worst experience.

As I said it is akin to what happened regarding our meal plans at the University of Utah - the "choice" the clueless had badgered the University into had resulted in us, the student consumer, playing more for less. Heck, here in the US we saw much the same thing when the airlines were deregulated under the guise of "choice".

 

[@Brett]

I note with the world In a health crisis governments are still finding ways to claw back money lost through stimulus by going after corporations with fines. Like there is nothing better to do. I also note that if the EU goes after someone why are individual EU member states also going after someone and fining them?

 

[Powerbooky]

Apple needs about 8 billion to run the App Store, that needs to come from somewhere. Are the authorities going to outlaw profit?

No, one of the largest parties in the current Dutch government is very very neoliberal. Their goal is changing everything to gain more profits for big business at the expense of the people. If everything would go to their views, all taxes would flow in their pockets and all government duties, including police departments, would be fully commercial/privatised.

 

[mrochester]

This is pretty much exactly as I predicted it would be.

 

[DelayedGratificationGene]

This is a big win for Apple as it undoubtedly should be. The politicians involved in this grandstanding garbage are clueless and wasting taxpayer money and time on this nonsense. Vote’em out!

 

[makitango]

If Apple is requiring proof, that also means that any dev can say that the users purchased the content through their website.

 

[The Phazer]

No, that is not the actual cost. That's just payment processing. Apple needs about 8 billion to run the App Store, that needs to come from somewhere. Are the authorities going to outlaw profit?

Eight billion to run the app store.

Hahahahahaha.

Hahahahahahahahaha.

 

[ksec]

No, that is not the actual cost. That's just payment processing. Apple needs about 8 billion to run the App Store, that needs to come from somewhere. Are the authorities going to outlaw profit?

$8B, I am assuming you are doing some very decent financial engineering to get that number. No Xcode, hosting, downloads, app review does not equate to 8B per year. Not even 1B.

 

[ksec]

And why does Apple need to comply with a small country like Netherland. Just pull out of the country. - From Previous Macrumors comment

 

[mrochester]

If Apple is requiring proof, that also means that any dev can say that the users purchased the content through their website.

They could, but risk being thrown out of the developer program if they are found to be trying to defraud Apple.

 

[draugminaion]

If they consider it monopolistic profit, yes

Monopolies are not illegal, profit is not illegal.
Using monopolist power in a way that stifles competition is illegal.
This is not so easy to demonstrate.
Apple has plenty of power but isn't not a monopolist.
Dating apps for example could just run a website.
That would not be as nice as an app.
But that is because Apple did work to make apps nicer than websites.
How can they legally get paid for that work?
They picked a way that is the least hassle for Apple, their customers and developers.
They tax the 10% of financial transactions that are for digital goods consumed on the device with 15%.
Or 30% if the developer makes more than a million per year.

They could do it differently, for example like how game engines do it, or like how xbox or playstation do it.
That is more hassle for everybody involved.

 

[draugminaion]

And why does Apple need to comply with a small country like Netherland. Just pull out of the country.

Apple can see how the wind is blowing. More like this is coming.