Google announced plans to pilot ‘User Choice Billing’ in select countries with a “small number of participating developers,” chief among them being Spotify. The new billing option will let developers offer customers another way to pay alongside Google’s payment system, which takes a cut of developers’ revenue.
The search giant detailed the new User Choice Billing system in a post on the Android Developers Blog. Interestingly, Google notes the announcement builds on its “recent launch” in South Korea, although as Android Police reports, the policy change stems directly from a South Korean law mandating app stores must accept third-party payments.
Plus, with other countries targeting Google over app store billing processes, it makes a lot of sense that Google would want to expand the system to garner some goodwill with regulators.
Google will still charge developers that use third-party billing
However, Google’s new User Choice Billing system doesn’t get rid of revenue share fees entirely. Through Google’s payment system, developers are on the hook to pay 10 to 30 percent of revenue to Google based on factors like business model and products sold. The search giant stresses 99 percent of developers qualify for a fee of 15 percent or less.
As for the new User Choice Billing system, Google explains it will reduce whatever service fee a developer would have paid by four percent when customers choose to use an alternate billing system.
As per Google, “for example, for the vast majority of developers who pay 15% for transactions through Google Play’s billing system, their service fee for transactions through the alternate billing system would be 11%.”
It remains to be seen how this will impact developers that want to use alternate billing, but I suspect it may dissuade some. Developers who want to use their own billing system will want to make sure the cost of doing so isn’t greater than the four percent they’re saving by using it. At the same time, third-party billing services will need to charge fees of less than four percent to make it worthwhile for developers.
As a reminder, a 2021 report cited internal Google documents that said the company could break even with a roughly six percent fee on the Play Store. Google, however, continues to push the angle that the Play service fees fund managing the Play Store, security, developer tools, app distribution and more.
Spotify among the first to offer a choice of payments
Music streaming giant Spotify will be among the first to offer User Choice Billing. The streamer announced a multiyear partnership with Google that will allow users who downloaded Spotify from the Play Store to pick between Spotify’s payment system or Google’s.
“Over the coming months, Spotify will work with Google’s product and engineering teams to build this new experience, and we’ll roll out in countries around the world. Working together, the companies will test and learn, jointly exploring product innovations across the Android platform. We anticipate launching the first iteration of User Choice Billing later this year.”
It sounds like Spotify is on board with Google’s User Choice Billing system, despite it continuing to charge fees. Spotify has long advocated against Google (and Apple) charging app store fees, so this change is likely a win. Just, maybe not as big a win as some had hoped.
Regardless, I’m interested to see how User Choice Billing progresses.