In-app mobile payment solutions offer new revenue opportunities for companies

By Todd Wasserman

Mobile payment solutions such as in-app purchases and billing have created a multibillion-dollar industry as consumers discover the lure of addictive games that require payments to play at higher levels.

As consumers become more comfortable with the technology, analysts expect more money to flow into mobile payment solutions. According to Business of Apps, in-app purchases are expected to reach $28.9 billion by 2017, accounting for more than 48 percent of total app revenue. These purchases drive about 95 percent of App Store monetization, Danielle Levitas, senior vice president of Research & Analysis for App Annie, told Wired.

The future of mobile-based monthly billing also looks bright. By the end of 2015, 5 percent of the world’s 600 million to 650 million near field communication-enabled phones are expected to be used to make monthly mobile payments, according to CIO. That number is up from just 0.5 percent of 450 million to 500 million phones in 2014.

Frustration with the in-app model

Those figures look promising, but they might obscure the fact that only a lucky few are making money from in-app purchases, such as King, the maker of popular game Candy Crush.

“The apps market is a hits-driven business with those few developers at the very top of the charts claiming most of the revenues,” IHS Mobile analyst Jack Kent told Wired. For others, it can be difficult to get consumers to fork over their money.

Eyeing this pain point in the market, Amazon introduced Underground, an app that subsidizes app publishers, last year. Instead of asking consumers to make an in-app payment, Amazon does it on their behalf. Royalties to such developers rose 3,600 percent from August 2015 to March 2016, and the customer base grew 870 percent, according to Wired.

In-app billing success

In contrast to in-app billing, in-app monthly payments are a more familiar concept. Consumers are used to setting up regular billing online. However, as more activity moves to mobile, some companies are making it easier to pay bills in apps as well. For instance, according to Vanity, Netflix’s in-app billing deal with Google lets Android users pay through their Android app. The streaming company announced a similar deal with Apple in September 2015, though both Google and Apple take a 30 percent cut of such subscription fees.

Integrating mobile payments into company operations

Companies that are interested in in-app purchasing or billing have a few options, including software-as-a-service, platform-as-a-service and infrastructure-as-a-service offerings that IT departments can plug into their operations. There are various applications for these technologies, ranging from letting customers make mobile payments to paying bills, receiving remittances and arranging and paying for services Uber-style.

The bottom line is that companies that embrace in-app payments as part of their mobile strategy are opening up a new revenue stream and a way to provide added convenience to their mobile customers.

Written By

Todd Wasserman

Technology Journalist

A veteran journalist, Todd has held a variety of roles including business editor at Mashable and editor-in-chief of Brandweek. He now writes full time about technology, marketing and advertising, among other topics.

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