Paddle is a rapidly growing Fintech company that offers software and digital product companies a completely different approach to their payment’s infrastructure. Instead of assembling and maintaining a complex stack of payments-related apps and services, Paddle is a merchant of record and reseller for its customers, taking away 100% of the pain of payments fragmentation.
This innovative approach to an issue that faces a large range of companies from all over the business world demonstrates the high ceiling that a company that Paddle could reach if it weren’t for the limitations put in place by Apple and Google.
I have no problem if Apple or Google build a better solution than us—that should win. Today, we are not even allowed to try.
Paddle, like many primary-digital companies has its potential for growth and increased reach reliant on the exposure it can get on the app-store, and thus one of the biggest challenges it faces comes from exclusion. For example, whilst operating the same business model as Apple and Google for web-based sales, Paddle is prohibited from offering this service within the app stores.
At present, any form of alternative billing mechanism is prohibited within an app that is present on the Apple App Store. The Apple terms and conditions expressly state that an app developer may not “include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase” with the exception of ‘reader apps’ such as magazine subscriptions.
Whilst Google are piloting a program that may allow apps to apply to use alternative providers under certain conditions, this still expressly prohibits Paddle from offering their service to Play Store customers. Thus, once again stifling the ability for a developer to receive the value that a Paddle merchant of record service would provide.
Poorer Outcomes for Consumers
The dominance of Apple and Google is delivering poorer outcomes for customers. Paddle’s platform works just like Apple and Google’s, with the payment for Paddle’s services being taken from a percentage of the transaction. Paddle charges between 6 and 7 percent of the total as its transaction fee, in comparison to Apple and Google, which come in at between 15-30% for a more generalised service. For its fee, Paddle provides additional subscription support and a greater selection of bespoke solutions to suit the particular product being sold.
Paddles solution has been used to reach millions of consumers over the last 10 years, but it had the potential to reach millions more if it weren’t for the punitive restrictions imposed on the platform by Apple and Google.
Any arguments for fiscal responsibility from Apple are irrelevant when you take into account that Paddle maintains a billing stack, transaction processing, calculating and remitting applicable sales tax, combats fraud and ensures consumer safety – all while charging only 5% plus $0.50 on a card transaction – nowhere near Apple’s extortionate 30%.
Even Google’s system limits consumers from using a more beneficial financial service, as in its current state, Google still would charge 26% service if a developers revenue exceeds $1 million, thus Android app developers would have to pay Google 26% and Paddle 6-7% under this arrangement—something not sustainable for developers or, consequently, for Paddle. The choice from Google to reduce its fee when it has less involvement in a transaction demonstrates that the fee that Google charges is less about service delivery to customers, and more around punishing consumer choice and preserving its own market share.
With no basis provided for why it has come to the proposed 4% reduction to 26% commission, it is clear that with unchecked power, Google and Apple will consider to act in their own interests, and not in the interests of the consumer of their developers.
Forced to Adapt to Survive
Paddle has also sought to adapt its solution to its customers, offering a greater variety of payment options (such as PayPal and AliPay) and greater control to developers to create subscriptions, free trials and an invoicing service at a reduced price – this demonstrates the creative freedom that apps can demonstrate when not limited by the restrains of Apple and Google, a key principle of the proposed DMCC bill.
With the nature of digital commerce being so international, and dealing with various regulations, coming to a trusted third party that is able to navigate all of those things is vital for many businesses. Paddle does this in a way that is economically viable for these businesses – yet it is something that is restricted, thanks to the current monopolistic system of Apple and Google.
The solution? The DMCC Bill, as Christian Owens, Founder and CEO said, ‘In its current form—as it is now—this is a very good Bill, and I really encourage it to go through without being watered down any further.’