In-App Purchasing

AAA

DEFINITION of 'In-App Purchasing'

The purchase of goods and services from an application on a mobile device, such as a smartphone or tablet. In-app purchases allow developers to provide their application for free, while providing anyone who downloads the free version the opportunity to upgrade. Because the developer can always add new features and content to the application after it is downloaded, application users won’t have to download a different application later.

INVESTOPEDIA EXPLAINS 'In-App Purchasing'

In-app purchasing allows application owners the ability to upsell application users from within the application itself, rather than through other marketing channels. For example, a game application may offer the user the ability to skip a particularly difficult level for a fee. The owner may provide consumers with the ability to view premium content that is behind a pay-wall. Consumers making purchases through an application do not have to visit a separate website to conduct the transaction.

Some application stores, such as Google Play or iTunes, allow users to download applications that allow in-app purchasing, but typically let the user know that an application has this feature. Some have policies allowing refunds if they are requested soon after a purchase is made. Application stores often take a percentage of the in-app sale.

Because in-app purchases are conducted through a mobile device, unauthorized purchases can result in security issues. This is especially the case if the username and password used in the application are not strong, and if credit card information is stored in the app in an insecure manner. Many applications will email a receipt after a purchase is made, which can allow a fraudulent purchase to be stopped.

Regulators have taken a keen interest in in-app purchasing. One of the primary reasons for this is because many children have access to smartphones, and children may make in-app purchases that their parents do not want.

RELATED TERMS
  1. Electronic Commerce - ecommerce

    A type of business model, or segment of a larger business model, ...
  2. Virtual Good

    A good or product traded in the non-physical realm, typically ...
  3. Bleeding Edge Technology

    Technology that is acquired almost immediately after its release, ...
  4. Tech Bubble

    A pronounced and unsustainable market rise attributed to increased ...
  5. Keiretsu

    A Japanese term describing a loose conglomeration of firms sharing ...
  6. Silicon Valley

    A part of the San Francisco Bay Area that is known for the many ...
Related Articles
  1. Still on fire.
    Investing News

    Is Amazon Prime Still The Best Deal In Tech?

    If you asked that question a week ago, when Seattle-based Amazon.com, Inc. (Nasdaq:AMZN) raised its annual fee for Amazon Prime to $99 from $79, you might have heard a far different answer.
  2. Investing News

    Approved: Paying Online Sales Tax

    States will now be allowed to collect sales taxes on purchases made from Internet-based retailers even if the retailer has no physical presence in that state.
  3. Investing Basics

    A Primer On Investing In The Tech Industry

    The tech sector can provide fantastic returns for investors with a little know-how in the field.
  4. Mutual Funds & ETFs

    Technology Sector Funds

    Evaluate past performance before investing in these types of gadget funds, as technology investors have been on a wild ride for a few years.
  5. Investing Basics

    3 Ways Companies Profit From Virtual Goods

    A report released in late 2011 predicts that the market for virtual goods will reach $2.9 billion this year.
  6. Investing

    Clean Or Green Technology Investing

    Innovations in energy and consumption grow as companies adopt them to reduce costs.
  7. Personal Finance

    3 Ways Apps Make Money

    Discover how most online businesses and web applications are making their money.
  8. Personal Finance

    How To Protect Your Smartphone From Identity Theft

    A smartphone is an identity thief's dream come true because of all of the information it contains. How can you protect your smartphone data?
  9. Personal Finance

    The Virtual Market: What We're Buying And How Much We're Spending

    Whether it's shoes for an avatar or a whole space station, the online market in virtual goods is bigger than you think.
  10. Insurance

    Understanding Japanese Keiretsu

    The structure of major companies in Japan is steeped in tradition and relationships.

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center