A new law in South Korea will force Apple and Google to open up to competing payment systems.
The Wall Street Journal reports that the new law will require companies to allow competing payment systems in their stores.
Summary
The bill that causes difficulties to Apple Pay and Google Pay in South Korea
Currently, on both Apple’s App Store and Google’s Play Store, the only payment systems used are those owned by the respective companies.
Those who sell on these stores must necessarily receive payments through the gateway of the store owners, and the same developers who create apps to be distributed through the two stores are forced to use the same payment systems.
In South Korea, a bill has been passed specifically to prevent owners of such platforms from restricting app developers from using various payment systems.
A penalty of up to 3% of the total revenue in South Korea is foreseen in case of violation of this new law.
Google and Apple charge 30% on payments for in-app purchases, which are only possible through their gateways, so a rule such as this one is likely to cause the fees that the two companies collect from in-app purchases to collapse.
To defend itself, Google has claimed that these fees help keep Android free, in return for allowing developers to reach billions of consumers worldwide.
However, a Google spokesperson said that they will respect this law.
Apple’s harsh response
Apple said that the new rule exposes users to the risk of being defrauded and losing their privacy, while making it difficult to manage in-app purchases and certain features such as Ask to Buy and Parental Control.
This could lead to a decrease in user confidence in App Store purchases.
The more than 482,000 Korean developers to date have collectively earned more than 8,550 billion Korean Won, or about $7.3 billion.
Some lobbyists for the two companies argue that the new rule would violate a trade agreement made in the past between South Korea and the US, because it would affect the value of the shares of the two companies, both of which are based in the US.
