App Credit Card Payments – A credit card company provides the necessary terms and protocols linked with the company. Credit card policies prevent unauthorized payments from flowing through the company. For preventing such unauthorized transactions, credit card policies came into being. These policies will include certain restrictions that users follow.
What are in-app payments?
So what are in-app payments? The word in-app means inside the app. In-app is the purchasing of items, services, and special functions inside the app. Most apps on the market are free. However, other apps are waiting for customers to purchase them. The authors of the app decide the amount for purchasing the app.
Electronic gadgets such as mobile phones, laptops, desktop computers, etc are eligible to download these apps. Any device having an internet connection or compatible with the app can download these apps. Most apps that are free have in-app purchases. Once the app downloads, the user may use it, but there will be some functions or items inside that app which will only be accessible if the user buys them.
The developers provide a free version of such an app on which he displays multiple advertisements to enforce users to buy those functions. Some free version apps might include multiple annoying apps and will consist of advertisements that educate users on buying the paid version of the app. The paid version is added free and with numerous functions. Let us look at an example. A free app of a football game will have multiple advertisements purposely disturbing the user while he is playing. The only solution for a diehard gamer would be to either stop playing the game or going for a paid, ad-free version. This advertisement gives the author of the app an upper hand. He provides the free version but inserts ads into them. This way authors benefit from the free app as well as the paid version.
The app provides a separate section for inserting credit card numbers
Some games become very tempting for children, to such an extent that they plead and request their parents to buy them the extra features of the game. For such purchases, the app provides a separate section for inserting credit card numbers. It becomes risky as security issues such as scams, phishing, and pharming, and ID theft is common.
Sometimes users provide the users with the original app but for a limited time. The ADOBE series stick to this methodology. ADOBE allows a wide range of software such as photoshop and video editing. The first time users can use the app for a limited duration after which they have to pay to use it. Some apps provide a limited use per day. The hotspot VPN allows user s to use the original app but restricts them to 500MB usage per day that is next to nothing.
All of these are just marketing strategies used by companies to attract income and lure users towards them.
Apple policy on in-app payments:
There are four mega policies on in-app payments in apple. The following consumable purchases as in-app payments: so what are consumable purchases? Consumable purchase is also known as the in-game currency. Consumable subscription or consumable currency is developed into games available on the app store. These games are free, but users have to purchase multiple features to continue gameplay. Moreover, it unlocks different features that help them in playing the game. Consumable purchase is ideal for the user who does not want their in-game credits to replenish. These consumable purchases restrict users to single device usage. If the user changes his device, these subscriptions will not be eligible anymore. They are purchased multiple times. Apple allows its users to practice consumable purchases. An example of such an app is the VISCO app in the app store.
Non-consumable purchases as in-app payments:
- Items under non-consumable subscriptions are permanent. It is a one-time investment. Subscription is another name for non-consumable purchases. After subscription, the app is used for the duration it is purchased. An example is buying a monthly subscription to watch the latest movies for free. The user can access multiple latest materials for a month. After one month is over, the app prompts the user with a bill. Any delay in bill payment will cancel the subscriptions, denying the user access to the material. Apple provides the user with non-consumable app purchases.
- Auto-renewable purchases as in-app payments: This allows users to purchase an app for a limited period. Purchase rates are set by the authors according to the time. If the user subscribes to an app for 5-months, he will be charged even less if he subscribes for 3-months. Some authors benefit their users by giving discounts such as 50 percent off on purchasing a 2-year subscription. Once the subscription is over, the app automatically renews the subscription and deducts the amount from the user’s bank. It is beneficial for both the users and the developers as it is much easier to continue with a subscription than canceling and re-subscribing it multiple times.
- Non-renewable subscriptions as in-app payments: Such subscriptions are time dependents. The user subscribes to a specific package for a certain amount of time. Once the time is over, he is denied access to the material. The user then has to manually re-purchase the subscription. It isn’t beneficial for developers as they continuously prompt users to re-subscribe without offering any benefits. Such subscriptions are good when accessing information restricted to time duration, such as the winter season. Apple provides multiple apps that use non-renewable subscriptions.
Credit/ debit card payments for third-party apps in IOS:
Apple charges a 30 percent commission for all digital products sold through the app store. Even though this deducts a whopping 30 percent of the original app’s profit, it is the rule set by apple and should be followed by all. However, digital goods providing voice-over-internet protocol also known as VOIP do not fall into this category. The reason it is excluded is that digital goods are not the same as digital products.
Apple does not allow in-app payments for digital goods, and then third party payments come in handy. Purchasing digital goods outside the application is denied. Apps using external links such as for buying goods is not allowed. Some apps consist of buttons that link to other websites for payments. Such type of purchasing is banned
Advantages of using credit cards for in-app payments:
- Convenient: Credit cards, in general, are very convenient to carry around. It is much safer and convenient to purchase a vehicle using a single plastic card, rather than carrying around a bag full of cash. Debit cards benefit users with the least interest percentages, whereas credit cards do have higher interest rates. It would be tiring as well as arduous for a person to go to the organization office of the app and pay for its services physically. The use of credit cards saves time and extra travel spendings for physically paying the author for the app’s features. Cash payments across national borders are only possible with the use of credit cards.
- Record keeping: The use of credit cards provides an organized detail of spendings to the user in the form of a computerized bill. If the user pays using cash, he will eventually lose track of his spendings and could overspend. Some credit card companies provide spending summaries to notify the user of his spending. The bill provided is an official letter and is also used for evidence purposes if the app developers deny any amount paid to them.
- Cash-advance loans: If a person has to immediately re-subscribed and is out of cash, he can request the credit card company for a small loan. This loan will have to be repaid with an interest.
The plus point of the app store is non-consumable purchases are for a lifetime.
- Cashbacks: The more a person spends using his credit card, the more cashback he receives. By purchasing multiple subscriptions, the user benefits from receiving cash backs.
- Reward programs: reward programs are also provided by the credit card company. Some reward programs include flying hours, credit card miles, or dining rewards.
- Protection against fraud and unauthorized payments: This is a plus point for users using credit cards as their source of payments. Usually, credit card companies have a list of complaints against a specific app that committed fraud with some users. It will help you in identifying which in-app purchase is okay and which is fraudulent. In case a credit card is stolen, the company prevents any purchasing without proper identification. If any such situation arises, the credit card is immediately blocked, and the owner is provided with a new card.
- Universally accepted: Moreover, credit cards have universal acceptance. If a person has to pay for in-app payments in Russia, he has to first convert dollars in Russian currency and then send it to the company. This arduous struggle is nullified with the use of credit cards. Once a person pays for an in-app purchase, the currency is automatically converted.
- Fewer tax deductions: payments made using credit cards are much cheaper as they have fewer tax deductions.
Disadvantages of using credit cards for in-app purchasing:
- Effects of delaying payment: A late payment fee of 40 dollars is charged if the user does not pay his credit card bills at the end of the month. Late payment will also lead to a hike in interest rates while purchasing features of an app. However, it is reversed after undertaking requirements. The user will lose any introductory interest-free duration if he delays bill payment of credit cards.
- Security issues: Although credit cards are convenient, they too come with multiple security issues. Sometimes users tend to pay more than the actual payment unintentionally. Such hazards occur because of errors such as double billing or a fraudulent company adding in extra charges. Hacking credit card information is due to technological advancements. Some hackers can make purchases using stolen credit cards and also successfully authorize the transactions. It will increase due payments, and such payments are not removed easily. Non-payment will lead to further issues such as a late payment fee of 40 dollars. Clearing such fraudulent charges can take up to months. Another problem related to credit cards is identity theft. Credit cards are the key to sensitive and secretive data such as the date of birth or social security number. Thieves can easily open fraudulent accounts using this information and involve you in illegal activities. To prevent such mishaps, keep your credit cards in a safe place and refrain from lending your account number to a company you are not sure of. Assure complete security if transactions are carried out online. Phishing is a common technique used by hackers to acquire your data.
- Physiological disadvantages: while paying using your credit card, you won’t get the feeling of spending more. People tend to immediately buy items on credit cards without thinking twice. It results in heavy credit card debt.
Android VS IOS:
A report of android authority in 2016 stated that IOS users spend 2.5 times more on in-app purchases. Around 7.1 percent of Apple users will carry out a purchase in comparison to the 4.6% of android users. Android users spend most of their money on utility apps which are times more than IOS users. It is because in-app purchases of utility programs are cheaper for android users. There is less spending on in-app purchases in IOS because apps like launchers, tools, and performance booster do not exist on the app store. There are very few utility programs.
Regionally, Asia contributed to 40% of in-app purchases. The main reason for this is that Asia is a huge mobile market with many android users. People of North America spend the most when it comes to shopping apps. North Americans spend 2.5 times more than average on shopping apps and times more than Asians. Latin Americans spend the least with the loser IAP of 0.16 dollars.
Average monthly spending on shopping apps is much more than gaming apps.
How does in-app purchasing work in IOS?
IOS devices contain a program called stork framework. This framework communicates with the IOS app store ensuring secure payment processing and notifies the app. They provide slots for entering credit card info. Once the data is entered, the store kit verifies the account number. And on approval requests the bank to deduct a certain amount. Upon deduction, the main IOS server is contacted. Which then provides access to specific features of the app to the user.
Best credit cards for in-app purchases:
The top recommended credit card is the capital one venture rewards credit card. It has an annual fee of 95 dollars and also provides a welcome bonus. The welcome bonus includes earning 60,000 bonus miles after using a capital one card for purchases up to 3000 dollars. Spending can become extreme on in-app purchases, but this card will allow you to earn 2-times the miles that you spend on in-app purchases. Miles earned using capital one venture cards are gain at fixed rates. This card gives back one mile on 1.4 cents.
The next in line is the Bank of America cash rewards credit card. This credit card has zero annual fees and gives out a welcome bonus too. The welcome bonus includes 200 dollars cash return after spending 1000 dollars. Bank of America provides a separate category of purchases for Apple products and IOS in-app purchases. They also give you the option of changing the category each month. If a user qualifies for bank of America’s preferred rewards, they can earn above 3 percent cash return.
Citi double cash card is also considered ideal for in-app purchases. It also has zero annual fees but does not provide any welcome bonus. Users earn up to 2% cash return on each purchase. If customers have the Citi thankyou points card, they can convert cash return rewards to thank you points.
The apple card also has zero annual fees with no welcome bonus. Apple provides a 3 % cash return on every apple product or in-app purchase. The apple card is consider useless for people who do not use Apple products.