Google to reduce the Play Store service fee from 30% to 15%; Find details

After facing a strong backlash from Indian app developers to Google's in-app purchase policies, Google has now cut the service fee from 30% to 15%. This service fee applies to app developers offering "in-app sale of digital goods and services," including in-game items such as weapons, avatar, or content platform subscriptions.

Google's policy infuriated the developers because Google had made it mandatory to use the Google Play billing system for in-app purchases and pay a high 3.

Until last year, Google didn't strictly enforce that all Android apps on Google Play would follow Google Play's billing system. However, around October 2020, Google made it mandatory for all developers selling digital products in their apps to use only the Google Play billing system and pay a "30% tax" on in-app purchases.

Now this 30% tax from Google is nothing new. It was always there, and even Apple charges the same. But Google didn't care much. Therefore, apps like Netflix, Spotify, Tinder, and other big names that had the ability to create their own payments ecosystem went ahead and created their own payment processes to bypass the billing system. from Google Play.

What is an in-app purchase?

For those who don't know, in-app purchases don't include things you buy from Amazon or pay money to someone who uses Paytm. In-app purchases primarily refer to whether you are purchasing a Gold edition of Tinder or purchasing a new weapon on Call of Duty Mobile or other similar types of purchases.

Google's New Policy

As of July 1, 2021, Google has announced that it has reduced the service fee that Google Play receives to 15% for the first $ 1 million of revenue each developer earns each year. "With this change, 99% of developers globally who sell digital goods and services with Play will see a 50% reduction in fees," Google said.

It is important to note that Google has not removed the requirement that developers use the Google Play billing system for in-app purchases. All app developers offering in-app purchases will need to integrate the Google Play payment system, and there is no other way to do this. But the service charge reduction can be seen as a relief.

App developers have a deadline until March 31, 2022, to integrate Play payments into their apps to make purchases. Those applications that already use Google's payment mechanism can benefit from the service fee reduction of July 1, 2021. Google also clarified that "more than 97% of applications worldwide do not sell digital products and, therefore, they do not pay any service fee."

Google tax slashed from 30% to 15% for the first $1M of annual revenue

By making the Google Play billing system mandatory, one thing is clear: no developer can make money by being present in the Google Play store and without paying any commission to Google. Be it for education, dating, fitness or others, any app that provides a freemium model and charges money on the app will need to register with the Google Play billing system.

Regardless of the purchase made, Google would have previously charged 30%, which for most developers, is quite high. Now, Google has reduced the tax from 30% to 15% for the first million dollars of revenue each developer earns each year.