The 15-30% commission charged by major app stores can significantly impact your bottom line. For many developers and businesses, implementing external payment processing has become an attractive alternative to reduce costs while maintaining control over the customer experience. But with this opportunity comes unique challenges in fraud prevention and subscription management. Let’s explore how you can navigate these waters successfully.
Understanding External Payment Processing
External payment processing refers to directing users outside the app store ecosystem to complete transactions on your website or external platform. Following recent legal decisions and policy changes, both Apple and Google now permit certain apps to include external payment links – potentially saving you up to 20% in fees.
Recent studies indicate that app developers can save between 10% and 20% on transaction costs by implementing external payment solutions, even accounting for the reduced fees that Apple now charges for external payment links.
However, this approach comes with several considerations:
- You become responsible for payment security and fraud prevention
- Subscription management must be handled through your systems
- User experience requires careful optimization to prevent checkout abandonment
- Compliance with various regulations becomes your responsibility
The Financial Benefits of External Processing
The math is compelling: For a business generating $1 million in annual in-app purchases, a reduction from 30% to 10% in processing fees represents a potential $200,000 in annual savings. Even with Apple’s new policies that still require a reduced commission on external payments, the savings remain substantial.
Beyond direct fee savings, external payment processing offers additional financial advantages:
- Direct customer relationships: Gain valuable first-party data for marketing and analytics.
- Flexible pricing models: Implement dynamic pricing, bundles, and special offers without platform restrictions.
- Reduced payment delays: Receive funds faster than through app store payment cycles.
- Multi-platform consistency: Maintain unified pricing and payment experiences across different platforms.
Managing Fraud in External Payment Systems
One significant challenge with external payment processing is fraud prevention – a service typically handled by app stores in their ecosystem.
When implementing external payment processing, it’s essential to incorporate advanced fraud prevention technologies such as machine learning algorithms, velocity checks, device fingerprinting, and multi-layered authentication systems.
Effective fraud prevention strategies include:
- Implementing real-time transaction monitoring to identify suspicious patterns
- Using machine learning to detect anomalies while reducing false positives
- Employing velocity checks to identify multiple rapid transactions from the same source
- Leveraging device fingerprinting to track suspicious patterns across devices
- Implementing 3D Secure 2.0 for an additional authentication layer with minimal friction
Subscription Management Outside App Stores
Subscription-based revenue models present unique challenges when moving outside app store ecosystems. You’ll need robust systems for:
- Automated recurring billing with proper authorization safeguards
- Smart retry logic for failed payments to maximize revenue recovery
- Comprehensive subscription analytics to track performance metrics
- Flexible plan management for various subscription tiers and pricing
- Effective dunning management to reduce involuntary churn
For most developers, building these systems in-house isn’t practical. Instead, partnering with a payment processor that specializes in subscription management provides the necessary infrastructure while allowing you to focus on your core product.
Implementation Best Practices
When transitioning to external payment processing, consider these best practices:
- Provide clear user instructions: Guide users through the external payment process with transparent communication.
- Optimize the checkout flow: Minimize steps and friction in the payment process.
- Implement strong security measures: Use tokenization and encryption to protect payment data.
- Ensure mobile-optimized web experiences: External payments often occur on web pages, which must be responsive.
- Offer multiple payment methods: Increase conversion by supporting various payment options.
- Test extensively: Verify the payment flow works seamlessly across devices and platforms.
Regulatory Compliance Considerations
External payment processing means taking on compliance responsibilities:
- PCI DSS compliance for handling credit card data
- GDPR and privacy regulations for customer data
- Local tax collection and reporting requirements
- Industry-specific regulations, depending on your app category
Is External Payment Processing Right for You?
While the potential savings are attractive, external payment processing isn’t ideal for every app. Consider your app’s revenue model, customer base, technical resources, and risk tolerance before making the switch.
For high-volume apps and subscription-based services, the savings and control gained through external processing often outweigh the additional responsibilities and implementation costs. However, apps with infrequent or low-value transactions might benefit more from the simplicity of app store payments despite the higher fees.
By partnering with a payment processor experienced in external processing for mobile apps, like Centrobill, you can navigate these challenges effectively while capturing the substantial fee savings that external payment processing offers.
Partner with Centrobill for Expert Payment Processing
Navigating the complexities of external payment processing requires a trusted partner with specialized expertise. Centrobill offers comprehensive payment solutions specifically designed for digital businesses seeking alternatives to app store billing. With many years of experience in high-risk payment processing, our platform combines industry-leading fraud prevention, sophisticated subscription management, and smart routing technology to maximize approval rates while minimizing chargebacks. Our PCI DSS Level 1 compliant infrastructure ensures your transactions remain secure, while providing dedicated support through every step of implementation. By partnering with Centrobill, you can confidently implement external payment processing that delivers substantial fee savings while maintaining the security and reliability your business demands.
