South Korean Regulator Releases Rules on in-App Payments

South Korean telecommunication regulators have banned Apple Inc., Alphabet’s Google and other app store operators from forcing software developers to use their payments systems, The Korea Herald reported Thursday (March 10).

Under the Telecommunication Business Act that was enacted last year, the Korea Communications Commission (KCC), will implement the enforcement order starting on Tuesday, March 15.

The new rules represent among the first restrictions by a major economy on Apple and Google. The tech giants have faced criticism worldwide for requiring the use of proprietary payment systems that charge commissions of up to 30%.

In January, Apple said it will allow alternative payment systems in the country to put the company in compliance with a law that prohibits app store operators from requiring customers to use their own in-app payment systems. Apple promised it would provide an alternative payment system at a reduced service charge, compared to the original fee.

Related: Apple Backs Alternate Payments System in South Korea

Last fall, Google said it will offer an alternative payment system on its app store in South Korea at a slightly reduced service charge to abide by the new law.

Regulators said they will determine whether store operators are in violation based on whether app developers are free to choose their preferred app payment system. The KCC will also determine whether the store operators hurt consumers benefit or crush competition.

The law only applies to app store operators with sales of 100 billion won ($81.6 million) in the previous year at least 1 million users, which includes Google and Apple.

If companies like Google and Apple force developers to use their own in-app payment systems, they will be required to pay up to 2% of their revenue.