Google is expanding payment choices on Google Play and revamping its service fee structure. The new system already applies in the United States, Europe and Japan, and is set to take effect in South Korea from Dec. 31.

After the overhaul, developers will be able to use their own payment methods or external web payments in addition to Google Play billing. With actual costs varying by payment method, attention is focused on how developers will feel the impact after it takes effect domestically at year-end.

Payment options expanded, fee structure revamped

Google Play said the new service fee structure and payment choice programme were first applied on June 30 in the United States, the European Economic Area (EEA) and Britain. It was introduced in Japan and Australia from Sept. 30. The scheduled date for South Korea is Dec. 31.

Japan had also been slated for a year-end rollout, but it was moved up by about three months after consultations with the Japan Fair Trade Commission and local developers. Google explained it is applying the new system in stages because it needs to build technical infrastructure and coordinate with local regulations by country.

Under the new system, a 10 percent service fee applies to the first $1 million of annual revenue generated through Google Play. For standard in-app transactions above $1 million in annual revenue, 20 percent applies to users who install or first update an app after the new system takes effect, and 25 percent applies to existing users.

If developers use the Google Play billing system, an additional 5 percent payment fee is added. If a developer uses its own payments, no separate payment fee is charged. For standard transactions through external websites, a 20 percent service fee applies to both new and existing users.

Under the standard rate, if an existing user purchases through Google Play billing, the combined 25 percent service fee and 5 percent payment fee matches the current 30 percent. The cost paid to Google falls to 25 percent with own payments and 20 percent with external web payments, down 5 to 10 percentage points. Actual savings could be lower after factoring in payment processing fees and system build and operating costs.

Google also said on the 14th it will introduce in South Korea by the end of this year the "App Experience" and "Game Level Up" programmes, which offer additional fee reductions to apps and games that meet quality standards. If a game meets the Game Level Up requirements, the service fee for standard in-app transactions above $1 million falls to 15 percent for new users and 20 percent for existing users.

In South Korea, debate continues over existing in-app payment policies. Last month, 24 groups including domestic app developers and civic organisations held a news conference calling for Google and Apple to correct their in-app payment policies and compensate developers for damages. They said the current burden, including app market fees and payment processing costs when using external payments, stands at 31 to 36 percent, and argued that meaningful payment choice is being restricted.

The sanction procedure by the Korea Communications Commission is also in its final stage. Kim Jong-cheol (김종철), chairman of the commission, said at a parliamentary audit on Oct. 12 that a resolution on an agenda to impose penalty surcharges related to Google and Apple's in-app payment practices is "expected to be decided before October ends". Sanctions over existing in-app payment policies and the introduction of the new fee structure will proceed separately.

Even the same overhaul may feel different by developer

Major game companies have already been expanding their own payment channels to cut fee burdens and secure direct payment touchpoints with users. NC has been expanding PC and web payments through its own platform, Purple, and Netmarble is also operating official web stores for major games. Krafton moved to strengthen its own payment infrastructure by investing in global game commerce company Neon Commerce in July.

Own payments can reduce app market fees while letting companies directly run promotions such as discounts and points and use purchase data. Smaller developers, however, may face additional costs for systems and security, refunds and customer support when building separate payment networks, making them relatively more dependent on app markets.

As a result, even under the same fee structure overhaul, the perceived impact could vary by developer. Large game companies with their own payment bases can compare costs across multiple payment routes, while smaller developers that rely heavily on app markets may feel the impact of the new fee structure more directly.

Ultimately, after the domestic rollout at year-end, how much a developer's total actual burden changes, including payment processing and system operating costs, is expected to be the standard that determines the overhaul's effectiveness, rather than the fee rate itself.

An industry official said large game companies already operate their own payment networks and can choose payment methods by comparing not only Google's fees but also their own system operating costs and user benefits. Smaller developers, the person said, face costs simply to build and operate separate payment systems, making it important how much their actual burden falls after the new system takes effect.