Unlocking New Revenue Streams: A Comprehensive Guide to External Payments for iOS App Owners in the EU

Are you a business owner in the European Union with an iOS app, looking to optimize your digital sales strategy? The landscape for in-app payments has changed, and understanding these shifts can significantly impact your bottom line. As of 2024, new regulations under the EU Digital Markets Act (DMA) allow for the use of external payment service providers (PSPs) within third-party iOS applications. This presents a major opportunity, particularly for those selling digital content like subscriptions and premium access.

This guide provides a detailed look at the benefits of this shift and the steps required to implement it successfully.

Table of Contents:

1. Understanding the Old vs. New Payment Models

2. A Comparison of Costs

3. The Implementation Process: A Step-by-Step Checklist

4. Partnering with Verestro

5. Benefits from implementing

Understanding the Old vs. New Payment Models

For years, the standard for selling digital content on iOS was the In-App Purchase (IAP) system, which uses Apple Pay. This method is built into the App Store. While convenient, it comes with a steep commission. Apple charges a 30% commission for new subscribers or large businesses and a 15% commission after the first year of a subscription or for small businesses. A business is classified as "small" if its annual revenue is under $1 million, while a "large" business exceeds that amount.

The DMA, which took effect in March 2024, has introduced an alternative: the Link-Out Option (LOO). This model allows you to use external payment service providers (PSPs), such as Paytool, to handle transactions for digital content. The key advantage of this is a significant reduction in commission fees. Under the LOO model, Apple's commission drops to 10% for small businesses and 17% for large businesses.

A Comparison of Costs

The financial benefits of using an external PSP are substantial. Let's compare the costs for a €1000 transaction:

• Apple Pay (IAP):

  • Small Company: Pays Apple €150 (15% commission).

  • Large Company: Pays Apple €300 (30% commission).

• Link-Out Option (LOO):

  • Small Company: Pays Apple €100 (10% commission) and a PSP fee (e.g., Paytool's 1.5% fee of €15) for a total cost of €115.

  • Large Company: Pays Apple €170 (17% commission) and a PSP fee (e.g., Paytool's 1.5% fee of €15) for a total cost of €185.

As these numbers show, the LOO model can save a business up to 18.5% on transaction commissions. It's important to note that the sale of physical goods is not subject to Apple commissions, and you can already use external payment providers for these without additional requirements.

The Implementation Process: A Step-by-Step Checklist

Enabling the Link-Out Option requires a methodical approach to ensure compliance with Apple's guidelines. Here is the step-by-step guide to follow:

1. Check for Eligibility: Your app must sell only digital content or services and be available in EU countries. You also cannot offer the same content through both IAP and LOO; they cannot coexist.

2. Accept the EU Digital Markets Act Addendum: Log in to App Store Connect, navigate to "Agreements, Tax, and Banking," and accept the required addendum.

3. Apply for External Link Entitlement: Complete the official form from Apple, providing your app's name, the list of EU countries where the feature will be active, and a link to your external checkout page. You must also include screenshots of the user experience flow, including the "Buy on the Website" button, the required disclaimer, and the external payment page.

4. Prepare a Compliant In-App UX: The user experience must be carefully designed. The button to initiate the external payment must be labeled something like "Buy on the Website" and open Safari (not a WebView). Before redirecting, a disclaimer screen must appear, informing the user that they are leaving the App Store and that Apple is not responsible for the transaction's security or privacy. The user must explicitly confirm their intention to proceed.

5. Implement the Checkout Link: The payment link must contain the necessary Apple parameters and lead to a hosted PSP page. This page must function correctly in Safari and should not include redirects or prompts to install other applications.

6. Receive and Add the Entitlement: After Apple grants permission, you will receive the "External Purchase Link Entitlement". This must be added to your app's configuration. The feature should only be activated for users in EU countries.

7. Submit Your Application for Review: When submitting your updated app version, include a note to Apple stating that you are using the LOO in compliance with the DMA. You should also provide screenshots or a video of the full UX flow and indicate that your chosen PSP, like Paytool, is a registered provider.

   
   

Verestro provides comprehensive support to its clients throughout the Link-Out Option implementation process. We assist with each critical step to ensure compliance with Apple's guidelines and facilitate a smooth approval process. We will help you confirm your app's eligibility, assist in completing the official form for the External Link Entitlement, and support you in designing a compliant in-app user experience. This includes ensuring the "Buy on the Website" button opens Safari and that the user sees the required disclaimer. We will also guide you in implementing the checkout link to meet all necessary parameters and ensure the hosted payment page works correctly. Finally, we will help you prepare the app for its final submission for review, including providing a note to Apple about your use of the LOO in compliance with the DMA and stating that Paytool Verestro is a registered PSP.

Partnering with Verestro

Navigating this new landscape can be complex, and ensuring every requirement is met is crucial for a smooth approval process. This is where a partner like Verestro can be invaluable. As a registered PSP, Verestro is equipped to help businesses with the technical and compliance aspects of the LOO integration. By leveraging their Paytool service, you can streamline the implementation of the external checkout link and ensure that it works correctly in Safari, helping you meet Apple’s stringent guidelines and accelerate the acceptance of your new app version. Don't waste more time and money—implement that with Verestro today! Contact our sales team!

Benefits from implementing

By adopting this process, businesses can significantly cut their transaction costs and gain more control over their payment infrastructure. This strategic move aligns with the new regulatory landscape and can lead to increased profitability for digital goods sellers within the European Union. From a customer experience standpoint, the change is minimal. The user's journey remains almost identical to a standard purchase, with the only notable difference being the required disclaimer that they are leaving the app to complete the transaction. This simple and transparent change ensures that the overall user experience remains smooth while the business reaps the financial benefits of the new payment model.