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. Silicon Valley

    A part of the San Francisco Bay Area that is known for the many ...
  5. Tech Street

    A term used in the financial markets and the press to refer to ...
  6. Consumer Internet Barometer

    A quarterly survey report produced by the Conference Board and ...
Related Articles
  1. Is Amazon Prime Still The Best Deal ...
    Investing News

    Is Amazon Prime Still The Best Deal ...

  2. Approved: Paying Online Sales Tax
    Investing News

    Approved: Paying Online Sales Tax

  3. A Primer On Investing In The Tech Industry
    Investing Basics

    A Primer On Investing In The Tech Industry

  4. Technology Sector Funds
    Mutual Funds & ETFs

    Technology Sector Funds

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center