Google
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Google to enforce its own payment system for all in-app purchases on Play Store

This move has faced backlash from developers in the country who have argued that Google cannot enforce its rules and regulations which are contrary to our country's laws.

Google has announced an update to its Google Play billing policies to clarify that apps using Play Store to sell digital services will be required to use the tech giant's own built-in payment system for in-app transaction.

The tech giant also said that it will be making changes in Android 12 to make it even easier for people to use other app stores on their devices while being careful not to compromise the safety measures Android has in place.

"We've always required developers who distribute their apps on Play to use Google Play's billing system if they offer in-app purchases of digital goods, and pay a service fee from a percentage of the purchase," said Sameer Samat, Vice President, Product Management.

This policy is only applicable to less than 3% of developers with apps on Google Play.

Google faced strong backlash from South Korean developers after it announced it will enforce its app market's billing system, which charges a 30 per cent fee to all app developers.

While Google has taken a 30% cut for all in-app purchases on the Play store through its billing system, some apps have circumvented the rule by using other systems, such as direct credit card payments.

"We have clarified the language in our payments policy to be more explicit that all developers selling digital goods in their apps are required to use Google Play's billing system," Google said in a post on Monday, adding it would give app developers a one-year grace period to adopt the system, while it will start enforcing the billing system on the Play store's new apps from January 20, 2021.

Google said the policy change will not affect the majority of app developers as nearly 97 per cent of those that sell digital goods already use the Play's billing system.

Local app developers have also argued that Google's move could be in violation of local telecommunications rules that prohibit unfair restrictions for users choosing services.

The Internet and Mobile Association of India (IAMAI) on Tuesday announced it has called a meeting of its founder members very soon to deliberate on the situation.

According to the IAMAI, as a payment aggregator, currently unlicensed but soon to be licensed in India, Google Billing System can choose which payment instruments it would work with and which ones it would not.

"The new draft RBI guidelines on payment aggregators, too, allows for that freedom. The compounding factor for many founders is the current revenue sharing policy of the Play Store," it said in a statement.

"Just because Google owns the gate and the gateway to the digital ecosystem of this country, they should not act arbitrarily and enforce their rules and regulations which are contrary to our country's laws," said Vishwas Patel, Founder, CCAvenues and Chairman, Payments Council of India.

"Also, they cannot force Indian apps developers/owners selling digital services to compulsorily use the Google Billing and payment system and charge 30 per cent MDR," he added.

"Google's stand in courts is that it does not need RBI authorisation as it is not a payment system operator and here it is mandating that Indian apps use only Google's proprietary Billing and Payment systems. Google should not exercise its dominant position, rather allow a level playing field for everyone in the ecosystem," Patel said.

According to the IAMAI, prima Facie, Google's announcement today even if legal is certainly not innocuous.

"For many founders of Indian start-ups, this brings back fears of the not so old deeply problematic revenue share model between VAS service providers (mainly digital goods) and telcos, it said.

Telcos took up to 70 per cent revenue share from VAS companies on the pretext of discovery, marketing and collection.

"In India, 98 per cent of people use mobile Internet and more than 90 per cent of people use Android phones, which gives Google control over many layers between customers and their service providers," the IAMAI stressed.

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