Alternative Payment Methods

Direct-to-Consumer (DTC) billing refers to the practice of processing subscription or purchase payments directly between the app developer and the end user, without routing the transaction through the Apple App Store or Google Play billing systems. DTC billing allows developers to collect payments via their own website, web checkout page, or third-party payment processor, thereby avoiding the 15–30% commission charged by app store platforms. This approach has gained significant traction following regulatory changes like the EU Digital Markets Act, court rulings in cases like Epic v. Apple, and Apple's own policy updates allowing developers to link out to external purchase options in certain regions. For subscription apps, DTC billing can dramatically improve unit economics — a $10/month subscription that nets $7 after Apple's commission nets $9.70 or more when processed via Stripe on a web checkout. However, DTC billing requires building and maintaining web payment infrastructure, managing subscription lifecycle events (renewals, cancellations, upgrades) outside of StoreKit or Google Play Billing, and carefully navigating the compliance requirements of each platform.

A platform fee (commonly called the "Apple tax" or "Google tax") is the commission that app store platforms charge on in-app purchases and subscriptions processed through their billing systems. Apple charges 30% on most transactions through the App Store, reduced to 15% for developers earning less than $1 million annually through the App Store Small Business Program, and 15% on all subscription renewals after the first year. Google Play charges 15% on subscription revenue and 15% on the first $1 million of non-subscription revenue, with 30% above that threshold. These platform fees have a profound impact on the unit economics of subscription apps. On a $9.99/month subscription, Apple's 30% first-year commission means the developer nets only $6.99 — and $8.49 after the rate drops to 15% in year two. This fee structure has driven significant industry interest in alternative billing mechanisms, including web-based checkout flows that process payments outside the app store ecosystem. Regulatory actions worldwide — including the EU Digital Markets Act, Japan's TPSA guidelines, and court rulings in multiple jurisdictions — are gradually expanding developers' ability to offer alternative payment options and communicate pricing outside the app, creating opportunities for meaningful margin improvement.

Third-party billing refers to the use of external payment processors — such as Stripe, Paddle, Braintree, or Adyen — to handle subscription and purchase transactions outside of Apple's App Store or Google Play's native billing systems. Third-party billing enables app developers to process payments on their own terms, typically through web-based checkout flows, and often at significantly lower processing fees (2–5% compared to 15–30% platform commissions). This approach has become increasingly viable as regulatory pressure and legal rulings in multiple jurisdictions have forced app store platforms to allow or accommodate alternative payment options. For developers implementing web-to-app subscription models, third-party billing is the technical backbone — it handles payment processing, subscription management, invoicing, tax calculation, PCI compliance, and often provides webhook-based events for real-time subscription status updates. The trade-off is added complexity: developers must build and maintain the web checkout experience, handle subscription lifecycle management outside the native app store frameworks, and ensure a seamless user experience as subscribers transition between the web payment flow and the app itself.

Web-to-App (Web2App) refers to the strategy and infrastructure that enables mobile app developers to acquire users and process subscription purchases through web-based flows before transitioning the user into the native mobile app experience. In a Web2App model, a user typically discovers the app through a paid advertisement or organic search, lands on a web page where they learn about the product's value proposition, completes a subscription purchase through a web-based checkout (processed by a third-party payment provider like Stripe), and is then directed to download and activate the app with their subscription already provisioned. The Web2App model has gained significant adoption among subscription apps for several reasons: it allows developers to avoid the 15–30% App Store and Google Play commissions by processing payments outside the native billing systems; it provides richer attribution data since web-based tracking isn't subject to the same ATT restrictions that limit in-app attribution on iOS; it offers a larger canvas for communicating value and presenting offers compared to in-app paywalls; and it enables more flexible pricing, offer, and discount strategies that aren't constrained by app store billing rules. The primary technical challenges of Web2App include maintaining a seamless user experience across the web-to-app transition, reliably syncing subscription entitlements between the web billing system and the app backend, handling edge cases (user doesn't download the app, switches devices, etc.), and solving post-iOS 14.5 attribution challenges that affect the ability to connect web conversion events to the advertising campaigns that drove them.

A web funnel is a structured, multi-step web-based experience designed to guide users from initial awareness to a conversion action — typically a subscription purchase, trial start, or app download. In mobile app marketing, web funnels have become a critical acquisition and monetization strategy, particularly for subscription apps looking to process payments outside the App Store or Google Play to avoid platform commissions of 15–30%. A typical web funnel for a mobile subscription app follows a sequence like: ad click → landing page → value proposition/quiz/personalization flow → pricing/plan selection → web checkout → payment confirmation → app download prompt → in-app activation. By processing the subscription on the web before directing the user to the app, developers retain significantly more revenue per subscriber. Web funnels also offer advantages beyond commission savings: they provide a larger canvas for communicating value (compared to a constrained in-app paywall), enable more sophisticated A/B testing of pricing and messaging, allow for richer attribution data (since web tracking isn't subject to ATT restrictions in the same way), and support more flexible offer structures (downsells, upsells, bundles) that aren't possible within native app store billing. The main challenge of web funnels is the additional friction of requiring users to complete a purchase flow on the web and then separately download the app — making seamless handoff and activation critical to overall funnel performance.