An in-app purchase enables developers a way of charging users for content and consumables through their existing mobile app. The user never leaves the application, and all the handling, accounting and billing is taken care of by the same mechanism as purchasing an application.

Whilst it presents an opportunity for businesses and developers to create a recurring revenue stream, you do need to carefully think about your payment platform.

iPhone apps
With the iPhone, you have the means to sell more apps and content to your users after the original purchase from within your app residing on their iPhone. The users are charged for content and consumables through their existing iTunes Account with Apple acting as payment processor (for a 30 percent cut).  In the In App Purchase system, Apple are not responsible for delivering the additional content, they simply approve and handle the payment.

It’s worth keeping in mind that the In App Purchase on the iPhone is only available from within paid apps. So if you have a free app in the iTunes store, you’ll have to think about a pricing strategy which is effectively giving users the chance to try your app for minimal investment, enabling them to see and play with it before being hit with further costs to upgrade or enable more features.

Android apps
Android is like Linux; it’s open-source, it’s free. Many have been excited about Android being an open-source platform, as it has enabled carriers to work with handset makers, dictating the feature set and, as a result, revitalising the revenue stream. They can promote their favourite apps, content, and services sales.

However, Android Market continues to pose major headaches for developers looking to distribute and bill for premium applications. Until recently, developers in only nine countries were able to offer paid apps via Android Market, and paid apps were available in just 14 of the 46 countries that the storefront served. Also, consumers must first register for a Google Checkout account in order to download paid Android applications, except in locations where operator billing is available.

Despite these challenges, I believe these issues will soon be resolved as Android Market continues to grow.

Where it’s all going…
The next generation of mobile phones will have specially-made SIM cards featuring an ‘app’ for mobile shopping payments.

Users follow simple on-screen instructions either to pre-load their mobile with funds, like a pay-as-you-go phone, or link the app directly to a bank account.

To purchase something the cashier swipes your mobile over the terminal. A beep registers the sale and users get the message ‘Accepted’ – or ‘Declined’ if the account is already maxed out.

Exciting stuff, but it certainly adds a new worry to accidently leaving your phone in the pub.

 

Russell Berry

Russell Berry is Director of AppCreatives, a fast growing SME that offers mobile/PDA application solutions that help organisations communicate with their customers through custom mobile devices. Leveraging industry intelligence and a technological background, the company designs and builds mobile applications that are customer-friendly and facilitate easy and quick data processing.

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members