Google to allow third-party payment options in apps in S. Korea

Google announced on Thursday that it plans to comply with the new South Korean law by allowing third party payment options in the country. 

The announcement comes after the Korea Communications Commission’s request for Apple and Google to turn in by mid-October compliance plans for the new South Korean law.

In late August, South Korea’s parliament passed a bill which will bar tech companies operating app stores in the country including Apple and Google from requiring developers to use their own payment systems that charge them up to 30%.

“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,” Google said in a statement.

Amid increasing regulatory pressure on the Play Store, in late October, Google had announced that it’s decreasing the service fee for all subscription-based apps on Google Play from 30% to 15%, starting from day one. 

Google said apps using alternative payment options will still be subject to service fees, based on digital sales on the platform. However, for the apps using its own payment system, Google will reduce the 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.” Google said.

Google warned that the alternative payment systems may not offer the same protections. 

The Korea Communications Commission (KCC) said Google’s plans would be implemented within 2021 and would only apply to S. Korea. 

“We were able to confirm Google’s determination to comply with the law, and I hope (Google) will implement this policy change in a way to reflect the legislative purpose of the revised law,” said KCC Chairman Han Sang-hyuk.

“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,” Google said.

It is not known yet if Apple will also comply with the new law. According to Reuters, Apple told the S. Korean government that it was already in compliance with the new law and did not need to change its app store policy. 

‘’The proposed Telecommunications Business Act will put users who purchase digital goods from other sources at risk of fraud, undermine their privacy protections, make it difficult to manage their purchases, and features like “Ask to Buy” and Parental Controls will become less effective,’’ the company had said following the new law. 

The KCC said if Apple failed to comply, it would consider measures such as fact-finding probe as a precursor to possible fines or other penalties.