Providing market intelligence for more than 35 years


Q4 2014

Industry Report

In-app Payments: Consumer and Developer Perspectives

In-app purchase has become an essential monetization model for app developers. Consumers and developers alike face an array of payment options, including credit card, carrier billing, digital wallet (e.g., PayPal), and virtual currency. With a growing volume of in-app purchases, both sides want to reduce transaction friction. This report examines needs from consumer and developer perspectives and analyzes the pros and cons for different payment options for digital in-app purchases. This report projects in-app purchase volume and transaction value for the U.S. market.


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The Bottom Line


1.0          Report Summary

1.1          Purpose of Report

1.2          Scope of Report

1.3          Research Approach

2.0          In-App Purchases – Overview

2.1          IAP Drivers

2.2          IAP Content

3.0          Consumer and Developer Perspectives

3.1          Consumer Perspectives

3.2          Developer Perspectives

3.2.1       App Distribution

3.2.2       Reducing Payment Friction

3.2.3       IAP Pricing Considerations

3.2.4       Privacy and Security

4.0          In-App Payment Solutions

4.1          App Store Players and Strategies

4.1.1       Apple

4.1.2       Google

4.1.3       Microsoft

4.1.4       Amazon

4.2          Payment Gateway Solution Providers

4.3          Mobile Wallet Players and Strategies

4.3.1       Google Wallet

4.3.2       Apple Pay

4.3.3       PayPal

4.3.4       AliPay

4.4          Alternate Payment Methods

4.4.1       Carrier Billing

4.4.2       Virtual Currencies

4.4.3       Comparison of Payment Methods

5.0          Forecast

5.1          Forecast Methodology

5.2          Sources of Information

5.3          IAP Revenue Forecasts

6.0          Market Implications and Recommendations

7.0          Appendix

7.1          Glossary

7.2          Company Index

Companies Researched or Briefed for the Report
Categorization of Connected App Download Types and Revenue Models
Smartphone Penetration among Broadband Households in the U.S.
Use of Apps on Mobile Devices by App Category
Types of IAP Content
IAP Content Terminology by App Stores
In-App Purchases on Smartphones or Tablets
Average Expenditure on In-App Purchases
In-App Purchases on Smartphones by OS
Average Expenditure on IAP on Smartphone by Smartphone OS
App Store Parameters for IAP
IAP Pricing Range on Apple App Store
IAP Ecosystem
IAP Payment Mechanisms by Channel and Content Type
Profiles of Payment Gateway Providers
Google Instant Buy API Payment Flow
Direct Carrier Billing Solution Providers
Direct Carrier Billing by Purchase Type
Comparison of In-App Payment Methods
IAP Revenue Forecasting Methodology
IAP Revenues (North America, Asia-Pacific, and Western Europe)
IAP Revenues by Region
IAP Revenues by Purchase Types

© December 2014 Parks Associates
All rights reserved.  No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher.

Printed in the United States of America. 

Parks Associates has made every reasonable effort to ensure that all information in this report is correct.  We assume no responsibility for any inadvertent errors.


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