A recent project has lead me to take my first look at Apple’s In App Purchase integration for iOS apps, which incidentally seems a lot less featured than I thought it was – it really is just a payment processing gateway and not much else. All delivery of content has to be implemented by the developer whether that be unlocking of functionality included in the app bundle or downloadable content from a server.

For this reason I find the fact that Apple charges the same 30% fee for IAP as they do for app purchases a little strange. Isn’t the point of the ‘Apple tax’ that it goes towards paying for the running and hosting of the store, and as all of that is down to the developer for IAP, why is the fee so high?

I suppose one of the reasons is that if Apple did reduce the price everyone would move to a ‘freemium’ model – release a free app and use IAP to unlock features and content – in an attempt to dodge the higher fee.

But they could easily get around this by having different fees for different types of IAP. When you set up your products in iTunes Connect, you already have to choose if the product is a consumable, non-consumable or subscription, so it would be simple to apply different fees to these categories. Correct me if I’m wrong, but that means they could leave the fee at 30% for unlocking functionality (non-consumable) and offer a lower (say 10%) fee for downloadable content (consumable).

But anyway, this is all very off topic – the point of this post was the use of virtual currencies inside iOS apps. The current lowest pricing tier for IAP is £0.59 ($0.99) which, although in the context of app prices may look like a small amount, could in fact be far to high if you want to offer the user a very small piece of functionality, such as a single play of a video.

So the only way to get around this would be to introduce an intermediary “virtual” currency. Where, for example, your £0.59 would get you 100 credits which you can use as you wish in your app. But Apple’s iOS Developer Program License Agreement states:

You may not use the In App Purchase API to enable an end user to set up a pre-paid account to be used for subsequent purchases of content, functionality, or services, or otherwise create balances or credits that end users can redeem or use to make purchases at a later time.

…in other words, no virtual currency – well that ruined my plan. But what confuses me the most is, how on earth did Zynga get away with Farm cash in their Farmville app?!

Even if we forget about £0.59 being too high for some purchases, a further problem to not allowing virtual currency concerns the limitations it puts on the number of products you can offer. Again, correct me if I’m wrong, but I think there is an limit to the number of products you can set up in iTunes Connect (something like 3000). So if you can’t create a virtual currency, each purchase needs to be an IAP of a product created in iTunes Connect. How would that work with an app that offers an ever growing inventory of products?

Apple being Apple, I’m sure they have considered this as well, and there is something about the whole IAP ting that feels slightly unfinished. And with the current buzz around subscriptions and the rejection of Sony’s Reader app, perhaps we can expect some changes soon.