Should App Developers Switch to Web Payments?
This is a single insight from This Week in Apps - App Store Trouble. Check out the full article for more insights.
Last week, the judge in the case of Epic vs. Apple found that Apple violated a 2021 ruling by preventing developers from directing users to pay outside of the App Store and by imposing a fee on those purchases. The judge also found that Apple's VP of Finance lied under oath, and issued a new ruling forcing Apple to allow developers to promote and steer users to pay outside of the App Store and disallowed any fees.
Most of you know this but I'm going to sprinkle some data on: Apple's App Store business is massive! In 2024 alone, Apple generated an estimated $28 billion in fees from developers and $10B of that came from the US, according to Appfigures Intelligence. That's $28B not from making apps, not from selling devices, but from enabling developers to sell to their customers.
As of last week, Apple is now required to let developers link out to external payment systems. It sounds like a major win for devs: no more 15/30% cut to Apple, more control, and more freedom. But while the headlines look promising, the reality isn't so simple and might not even be better.
Let's dig into what this change really means for most developers.
Key word here being most. You'll see what I mean soon.
At first glance, the appeal is obvious. If you could keep that 15/30% cut for yourself, why wouldn't you? But Apple doesn't just process payments...
The App Store bundles a lot of invisible infrastructure into that fee. That's going to shift and become the developer's burden. Running your own payment flow takes physical infrastructure, working with merchant services, writing server-side code, securing it all, handling fraud, transaction retries, dunning management, and more.
It's a lot of work most developers would hate. I say this from experience
Third parties like Stripe can help, but it comes at a cost and with risks.
And then there's taxes.
Apple handles sales tax compliance automatically and invisibly. If you're the seller of record now, that becomes your responsibility.
You'll need to determine where you have tax nexus, register in those states, calculate the correct local rates, and file remittances on their schedule. And if you don't there are penalties and they aren't pleasant.
Like infrastructure, there are 3rd parties that can help which you'd have to integrate and maintain, and, come at a cost.
Fraud is another unglamorous concern.
Apple handles it all behind the scenes so you never have to see a chargeback letter. And not only that, if fraud spikes, platforms like Stripe have been known to shut down accounts entirely. That's terrifying if you rely on recurring revenue. So you're not just responsible for preventing fraud to protect your revenue but also for maintaining trust with payment platforms.
And that's all before we even talk about discovery.
Right now, Apple decides which apps get visibility in the App Store. While the algorithm isn't fully transparent, I can tell you revenue doesn't play a role. If there's choice, Apple might start to include it which could penalize apps that don't use its payment system (or rewarding those who do).
The thing is that for companies like Epic and Spotify, discovery isn't critical. They have their own engines that drive downloads. All they use the App Store is for distribution. It's a glorified CDN.
But most developers aren't Epic. Most developers rely on Apple's discovery engine to bring in new users. When I say rely I mean need.
And then you have trust.
Pushing users from an app to a website to pay is disjointed and jarring. And that friction means some will abandon the process. Apple has spent years building trust with consumers and optimizing its purchase flow. Stripe isn't as much of a household name. Most apps aren't either.
Stack the costs of all of the services you'd need to run this + credit card fees + the potential loss from the added friction and you'll end up not very far off from what Apple is charging.
Which is why I think this injunction probably won't have as big of an impact as many feel. It feels extreme, and I wouldn't be surprised if it's overturned or narrowed. But even if it sticks, the reality is that the economics don't support widespread adoption of external payments.
Unless Apples turns this fight ugly, which they might...
But there's still a way for Apple to "win" here. Apple can drop its fee to 12% (under $1M) and 18% for everyone else, but only for developers using in-app purchases exclusively. I don't think that'd go against the injunction and would make the added headache of web payments, for most, not at all appealing.
Remember, for just 12% you'll get payment processing, tax handling, fraud prevention, discovery, and a streamlined conversion process. That's not a high price to pay.
Because here's the hard truth: bypassing Apple sounds good, but for most, it's a trap.
The effort required to replicate what Apple bundles—and the risk of losing visibility and conversions could mean developers end up making less money, not more.
The next few weeks will be critical to the future of the App Store. Let's see how it plays out.
If you're thinking of ditching Apple's payment system, do the math first.
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All figures included in this report are estimated. Unless specified otherwise, estimated revenue is always net, meaning it's the amount the developer earned after Apple and Google took their fee.
