Enabling alternative billing systems for users in South Korea

Enabling alternative billing systems for users in South Korea

Posted by Wilson White, Senior Director of Public Policy

Click here to read this post in Korean

The South Korean government recently passed a law regarding app stores and billing systems for users in South Korea. We respect the decision of the National Assembly, and we are sharing some changes to respond to this new law, including giving developers that sell in-app digital goods and services the option to add an alternative in-app billing system alongside Google Play’s billing system for their users in South Korea. These changes will allow us to comply with the law, continue to invest in Android and Google Play, and provide the seamless, safe and trusted user experience billions of people expect from Google Play.

Providing user choice at checkout

In response to the recent legislation, developers will now be able to add an alternative in-app billing system, alongside Google Play’s billing system, for their mobile and tablet users in South Korea. At checkout, users will be able to choose which billing system to use.

We work hard to keep users safe and maintain the experience they have come to expect from apps and games downloaded from Google Play. Alternative billing systems may not offer the same protections or payment options and features of Google Play's billing system—such as parental controls, family payment methods, subscription management, Google Play gift cards, and Play Points. In fact, this year alone, more than 1.5 million users in South Korea have used Play gift cards. And more than 12 million users in South Korea have enrolled in Play Points, collectively accruing over 20 billion points in their accounts, which they are unable to use on alternative billing systems. South Korean consumers value these features of Google Play’s billing ecosystem, and we believe it’s critical to continue to offer them the choice to use Google Play billing if they desire.

In the coming weeks and months, we will share implementation details for developers, including instructions for submitting security and customer service verifications and a set of user experience guidelines so users can make an informed choice. 

Maintaining our ability to invest in the ecosystem

Like any business, we need to have a sustainable model to continue to improve our products while maintaining important user protections. Just as it costs developers money to build an app, it costs us money to build and maintain an operating system and app store that makes those apps easily and safely accessible by consumers.

Instead of charging licensing fees for our operating system like other platforms have, we chose to do things differently by making Android and Google Play free, with minimal restrictions. Today, Android is used on tens of thousands of device models from smartphone companies around the world. More than two million developers use Google Play to reach 2.5 billion users in 190 countries. 

We’ve been able to grow the Android and Google Play ecosystems by charging a fee based on purchases of digital content. This business model helps keep costs low for a wide range of device makers and developers. It’s a model that works. Today the ecosystem is thriving with more than 3 billion active Android devices globally. 

Google Play’s service fee covers more than simply payment processing, including a range of distribution, development, and security services:

• Android & the Google Play Store: The free Android operating system enables hardware manufacturers to build a wide range of devices at different price points that gives users unprecedented choice.  And the Google Play Store delivers the world's largest selection of apps and games, available in over 190 countries with personalized recommendations and easy discovery of high-quality apps. 

• New Android platforms: We build platforms for new form factors such as Auto and TV to help developers increase their reach in new ways.

• Security: Consumers trust Android and Google Play because of its security, the reviews of apps to ensure they comply with policies around safety and privacy, and with automated security of Google Play Protect that scans over 100 billion apps per day.

• App distribution: Developers can instantly reach over three billion Android users with the ability to optimize delivery by device and functionality and provide ongoing updates.

• Developer tools: Developers can run experiments, beta test, optimize store listings, analyze performance, and more.

• Billing system: Users enjoy safe and trusted payments, while developers can easily transact with 700 million users using Google Play gift cards and locally relevant forms of payment.

97% of developers don’t sell digital content and are not subject to any service fee for having their apps displayed in the Play Store or for any of the services listed above. For the remaining 3% of developers who do sell digital content, we've tailored our fee structure with different programs to meet different businesses' needs, so that 99% of developers qualify for a service fee of 15% or less. 

Service fees for distributing apps via Android and Google Play will continue to be based on digital sales on the platform. We recognize, however, that developers will incur costs to support their billing system, so when a user selects alternative billing, we will reduce the developer’s service fee by 4%. For example, for the vast majority of developers who pay 15% for transactions through Google Play's billing system, their service fee for transactions through the alternate billing system would be 11%. As another example, certain categories of apps participating in our Media Experience Program, such as an eBooks provider, will pay a 10% service fee for transactions made via Google Play’s billing system, but only 6% for transactions on an alternative system.

As we always have, we’ll continue to listen to feedback from our Korean developer ecosystem and continue to invest to help them thrive on Google Play. We look forward to providing more details in the coming weeks and months ahead.