Paddle Develops Alternative to Apple's In-App Payments
Paddle Launches Alternative In-App Purchasing System for iOS Developers
Paddle, a provider of solutions for businesses utilizing subscription models, is anticipating a shift in the App Store landscape. The company is positioning itself to offer a third-party payment alternative should Apple permit the use of such systems by developers.
A New Approach to In-App Purchases
Today, Paddle unveiled a new in-app purchasing (IAP) system specifically designed for iOS developers. This system is intended to function as a direct substitute for Apple’s existing IAP infrastructure.
A key benefit, according to Paddle, is that developers will retain a larger portion of the revenue generated through their applications.
The Risks and Potential Rewards
This venture represents a substantial investment, with an uncertain outcome. The success of Paddle’s system is contingent upon several factors.
Paddle’s system promises developers comprehensive access to customer data throughout the entire customer lifecycle. It will integrate direct subscription management capabilities alongside tools enabling users to temporarily suspend their subscriptions.
Payment Flexibility and Reduced Fees
The platform will also accommodate various payment methods, including PayPal. Furthermore, developers will gain the ability to independently manage refunds – a feature frequently requested by the developer community.
Paddle’s fee structure is set at 10% for transactions below $10 and 5% for those exceeding $10. This contrasts with Apple’s standard fees of 30%, which are reduced to 15% for subscription apps in their second year, and for participants in the Small Business Program and Apple News Partner Program.
Reliance on Legal Outcomes
The viability of Paddle’s product is fundamentally linked to the outcome of the Epic v. Apple lawsuit and how Apple interprets the court’s ruling regarding third-party payment systems.
Currently, Paddle cannot definitively confirm whether its system will be approved by Apple.
The Epic Games Lawsuit and its Implications
In September, U.S. District Judge Yvonne Gonzalez Rogers ruled in favor of Epic Games on the matter of third-party payments within the App Store, although she determined that Apple had not engaged in anti-competitive practices.
Epic Games has indicated its intention to appeal the court’s decision, seeking the ability to distribute its games directly to iOS users and utilize its own payment processing systems.
Interpreting the Court’s Ruling
The ruling currently prevents Apple from prohibiting developers from including links and calls to action within their apps that direct users to alternative payment options.
However, the judge’s interpretation of third-party payments remains subject to Apple’s discretion. Some experts believe the ruling only prevents Apple from rejecting apps with external payment links, and does not necessitate support for fully integrated competitive payment systems.
Paddle’s Confidence
Despite these uncertainties, Paddle maintains a positive outlook.
“Our understanding, and that of our legal advisors, is that Paddle In-App Purchase is permissible within the Apple vs Epic legal ruling,” Paddle stated. “We would welcome Apple sharing its own interpretation on this to bring further clarity to an issue that will have a significant impact on iOS developers and the wider market.”
Availability and Current Client Base
Paddle plans to launch its system on December 7, 2021, aligning with the court’s ruling timeline.
The company currently serves over 3,000 software clients and processes billions of dollars in annual payment volume. It remains to be seen whether developers will adopt this alternative to Apple IAP, potentially risking app rejection from the App Store.
Paddle reports that several developers, including MacPaw, have expressed interest in testing the new system.
