EU Distribution Costs: IAP or Alternative Payment?

If you have an iOS app that you distribute in the EU, the new Apple terms taking effect on October 1, 2026 will force you to pick one of four payment/distribution paths — a more lasting commitment than it looks on paper. This EU app distribution cost decision guide goes beyond listing the rates side by side: it shows, with real numbers across three revenue profiles, when each path makes sense, the operational costs that don't show up on the rate card, and where the 12-month lock-in can leave you.

💡 Pro Tip: Before you start comparing rates, calculate your _total_ proceeds from the previous calendar year (across all your apps, not just the EU) — the Small Business Program threshold looks at that number, not just EU revenue.

Table of Contents

• The August 18 announcement and the argument that's still going
• The cost components of the four paths
• The real math for three profiles: an indie, a growing subscription app, a team moving to web distribution
• Profile 1: Indie developer, SBP-eligible
• Profile 2: Growing subscription app, mixed portfolio
• Profile 3: Team moving to web distribution
• The hidden costs: payment provider, refunds, support, compliance
• User trust and conversion loss
• How small-business and subscription discounts work
• Setting up a hybrid setup (store + web)
• The threshold for operating an alternative marketplace
• Decision tree
• FAQ
• Which distribution model is cheapest in the EU?
• When does web distribution make sense?
• How does the small business program work under the new terms?
• Can I change my chosen payment path later?
• What does it take to open an alternative marketplace?
• Has the EU Commission approved these new terms?
• Conclusion
• Sources

The August 18 announcement and the argument that's still going

On August 18, 2026, Apple announced it had updated the Developer Program License Agreement for apps distributed in the European Union. According to the announcement, the changes were prepared "in close collaboration with the European Commission," and the key updates take effect on October 1, 2026. The previous Core Technology Fee is being removed, replaced by a flat 5% Core Technology Commission (CTC) that applies only to digital sales of apps distributed outside the App Store (alternative marketplace or Web Distribution); the Initial Acquisition Fee and the old Store Services Fee are also being removed entirely.

But that doesn't mean it's "settled." On September 8, 2026, 18 organizations led by the Coalition for App Fairness (including the European Publishers Council) sent a joint letter to the European Commission arguing the new terms still violate the Digital Markets Act (DMA); their main objection is that the 15% "store services" commission on link-out sales conflicts with DMA Article 5(4)'s requirement that steering be free of charge. The Commission's stance cuts both ways: on August 18, 2026 it said "The Commission welcomes Apple's changes to their business terms," while a spokesperson added, "At this stage the Commission is not considering periodic penalty payments, but is rather monitoring the announced measure." So the terms are being watched — but this isn't a DMA compliance ruling or formal approval. A line-by-line breakdown of all the changes and the early-adoption decision matrix is in Apple's new terms in the EU; the focus here is what each path will cost you.

The cost components of the four paths

Starting October 1, 2026, an EU-distributed app has four separate commission regimes; picking one doesn't rule out the others — you can mix them by channel.

No SBP discount is defined for CTC; budget it as a flat 5%. The only documented exemption is for small marketplace operators: under €10 million global revenue over the past 12 months and under €1 million lifetime revenue from the EU marketplace app's download/subscription fees.

The real math for three profiles: an indie, a growing subscription app, a team moving to web distribution

Seeing the rates is one thing; seeing what they do to your revenue shape is another. Let's work through it step by step with three different profiles.

Profile 1: Indie developer, SBP-eligible

In the previous calendar year you made $150,000 in proceeds across all your apps — that's under the $1 million SBP threshold, so you qualify for the reduced 15% rate on IAP sales.

1# Profile 1: Indie developer, SBP-eligible (prior-year proceeds < 1M USD)
2gelir=150000
3oran=0.15
4net=$(echo "$gelir - ($gelir * $oran)" | bc)
5echo "Net gelir: $net USD"
6# Net gelir: 127500.00 USD

If you ran the same revenue at the non-SBP standard rate (26%), your net would be $111,000 — the $16,500 gap is the pure value of being enrolled in SBP.

Profile 2: Growing subscription app, mixed portfolio

You have $2,000,000 in annual IAP revenue; $1,200,000 of that is new subscriptions and first-year sales (standard 26%), and $800,000 is renewals past their first year (reduced 15%).

1# Profile 2: Growing subscription app — mixed portfolio
2ilk_yil=1200000      # standart oranda (yeni abonelik + ilk yıl)
3yenileme=800000      # 1 yıl sonrası yenilemeler, indirimli oranda
4net_ilk=$(echo "$ilk_yil * 0.74" | bc)
5net_yenileme=$(echo "$yenileme * 0.85" | bc)
6toplam_net=$(echo "$net_ilk + $net_yenileme" | bc)
7echo "Toplam net: $toplam_net USD"
8# Toplam net: 1568000.00 USD (efektif komisyon ~%21.6)

Your effective commission rate isn't readable from a single line here — how much of your portfolio is renewals directly determines your real effective rate.

Profile 3: Team moving to web distribution

A team with $5,000,000 in digital product revenue, with the technical capacity and legal eligibility (thresholds below), moves to Web Distribution + 5% CTC: $5,000,000 × 0.95 = $4,750,000 — the gross figure before the payment processor's cut and PCI compliance costs, which depend on the processor you choose; there's no flat rate on Apple's side. Don't call this path "the cheapest" without a quote from your own provider.

The hidden costs: payment provider, refunds, support, compliance

The gap between the rates looks appealing, but the alternative payment path saddles you with operational burdens beyond the commission itself. In Apple's own words: "it will be harder for Apple to support customers or refund users who experience issues, fraud, or abuse" — payment/billing issues and tax administration also become the developer's responsibility. In practice: your own support process, your own refund policy, and a PCI Level 1-compliant payment provider.

On top of that, every developer using alternative payments must submit a monthly transaction report within 15 days of month-end. Not a one-time setup — a recurring operational loop:

1# Alternatif ödeme kullanan geliştiriciler için aylık rapor son tarihi
2# Apple: "provided monthly within 15 days following the end of the calendar month"
3ay_sonu="2026-10-31"
4son_tarih=$(date -j -v+15d -f "%Y-%m-%d" "$ay_sonu" "+%Y-%m-%d" 2>/dev/null || date -d "$ay_sonu +15 days" "+%Y-%m-%d")
5echo "Ekim 2026 raporu son tarihi: $son_tarih"
6# Ekim 2026 raporu son tarihi: 2026-11-15

Ease this burden with the automation patterns in App Store Connect API automation — manual tracking risks a single missed deadline turning into a contract breach.

These three items (support, refunds, compliance reporting) look small individually, but together they require a team: someone tracking payment disputes, someone watching your provider's PCI Level 1 compliance and the PSP details in your App Review notes, someone else who won't miss the monthly reporting deadline. If you're a one-person team, calculate whether the commission savings actually cover that burden. In an SBP profile like Profile 1, the gain is only 5 points: 15% on IAP versus 10% on alternative payment/link-out. Outside SBP, the gap widens to 11 points: 26% versus 15%. At Profile 3's volume, that same point gap becomes a much bigger budget line.

User trust and conversion loss

Apple imposes two structural constraints on apps offering alternative payment. First: "Apple In-App Purchase must be displayed as prominently as any other payment option shown" — you can't shrink the IAP button and push the alternative forward. Second: a user entering the alternative payment flow sees a system-displayed disclosure sheet stating the transaction happens directly with the developer, not Apple. It appears on the first transaction; the user can dismiss it for future purchases via a "Show This Reminder Next Time?" modal.

There's no verified industry figure for how much these two constraints affect conversion; treat any source that gives you a number here with skepticism. What's certain is that the friction structurally exists: on the first purchase the user sees an extra screen and makes an extra decision. Don't roll this out broadly without A/B testing it in your own app.

There's also a special child-safety requirement that kicks in with alternative payment. If children/teens make up a large share of your audience, that means an additional design and consent flow — a second friction point on top of the disclosure sheet. Look not only at the commission gap but also at your user base's age distribution; if this requirement applies to you, the alternative payment path's total cost can come out higher than you calculated.

How small-business and subscription discounts work

The Small Business Program (SBP) threshold isn't EU-specific — it's Apple's general program: developers who made under $1 million in total proceeds across all their apps (worldwide, not just the EU) in the previous calendar year are eligible. The standard rate applies to subsequent sales in the year you exceed the threshold; drop below it in a later year and you requalify for 15% the following year — a mechanism that runs with a one-year lag.

The discount applies across all three commission regimes: 15% instead of 26% on IAP, 10% instead of 20% on in-app alternative payment, 10% instead of 15% on link-out. There's also a second discount path specific to subscriptions: even if you're not enrolled in SBP, renewals of a subscription past its first year automatically move to the reduced rate — that's exactly why Profile 2's math is mixed. See the App Store Connect side of this mechanism in offer codes and subscription management.

Setting up a hybrid setup (store + web)

One of the most notable changes: operating an alternative marketplace or using Web Distribution no longer requires incorporating a legal entity or being established in the EU — a significant loosening versus the previous DMA implementation. But the flexibility ends there: you must keep your chosen payment combination fixed for 12 months across all of the EU's store regions. That lock covers payment options only — IAP, in-app alternative payment, and out-of-app offers with an actionable link (link-out); Web Distribution itself is outside its scope. So you can run a hybrid setup, but the combination has to be identical in every store region: you can't wire up a different payment setup country by country and test your way through the year.

The entitlement's name has also changed from what I covered in IAP integration with StoreKit 2: alternative payment now needs the StoreKit External Purchases or Offers Entitlement, key com.apple.developer.storekit.custom-purchase-link.allowed-regions, using the ExternalPurchaseCustomLink API (isEligible, then showNotice). The old StoreKit External Purchase Link Entitlement (EU) Addendum is superseded by Attachment 14 on October 1, 2026. Pinning the country codes at build time makes the 12-month lock-in explicit in code — leaving it dynamic at runtime creates confusion both in Apple review and operationally.

The threshold for operating an alternative marketplace

Removing the legal-entity requirement doesn't mean opening an alternative marketplace is open to everyone. Starting October 1, 2026, Apple requires at least one of seven criteria: a mid-tier Dun & Bradstreet financial stability score; being publicly traded or owned by a publicly traded company; venture funding from an established investment firm; audit by a licensed accountant; approved fee-waiver status as a public/educational/nonprofit entity; a $1,000,000 stand-by letter of credit; or one million first-installs worldwide annually.

1type MarketplaceEligibility = {
2  dunBradstreetScoreOk: boolean;
3  publiclyTradedOrOwnedByPublicCompany: boolean;
4  ventureFundedByEstablishedFirm: boolean;
5  auditedByLicensedAccountant: boolean;
6  feeWaiverApprovedEntity: boolean;
7  standByLetterOfCreditUSD: number;
8  annualFirstInstallsWorldwide: number;
9};
10 
11function isEligibleForAltDistribution(c: MarketplaceEligibility): boolean {
12  // One of Apple's seven documented criteria is enough — not all of them.
13  return [
14    c.dunBradstreetScoreOk,
15    c.publiclyTradedOrOwnedByPublicCompany,
16    c.ventureFundedByEstablishedFirm,
17    c.auditedByLicensedAccountant,
18    c.feeWaiverApprovedEntity,
19    c.standByLetterOfCreditUSD >= 1_000_000,
20    c.annualFirstInstallsWorldwide >= 1_000_000,
21  ].some(Boolean);
22}
23 
24console.log(
25  isEligibleForAltDistribution({
26    dunBradstreetScoreOk: false,
27    publiclyTradedOrOwnedByPublicCompany: false,
28    ventureFundedByEstablishedFirm: true,
29    auditedByLicensedAccountant: false,
30    feeWaiverApprovedEntity: false,
31    standByLetterOfCreditUSD: 0,
32    annualFirstInstallsWorldwide: 200_000,
33  }),
34); // true

The same expanded criteria also apply to Web Distribution from October 1, 2026. iOS/iPadOS apps distributed outside the App Store must also go through notarization — a separate technical step where Apple verifies the app isn't malicious, independent of marketplace approval. Apple also plans a fall-2026 update letting EU users install alternative marketplaces and apps for 90 days while traveling outside the EU; no exact date given.

Decision tree

Pull the components above together into a single flow:

• Was your total proceeds in the previous calendar year under $1 million? If yes, enroll in SBP and stay on IAP — the 15% rate, leaving the support/refund burden with Apple, is the highest net-revenue-to-effort ratio you can get.
• Above that, and your engineering + customer support capacity is weak: stay on IAP and pay the standard 26%. Alternative payment's operational burden (PCI compliance, monthly reporting, your own refund process) usually erodes the savings at this profile.
• Above that, and you have the capacity to build your own payment infrastructure and support process: evaluate in-app alternative payment (20%/10%) or link-out (15%/10%, only within the 7-day window) — but don't move to this path without measuring the IAP button's equal-visibility requirement and the disclosure-sheet friction.
• If you meet one of the seven criteria (D&B score, public trading, venture capital, financial audit, exempt entity, letter of credit, 1M installs) and have high-volume digital product sales: put Web Distribution + 5% CTC on the table as a serious option — but don't conclude "cheapest" without a quote from a third-party payment processor.
• Whichever path you choose: decide with the 12-month lock-in in mind, because you won't be able to change this combination across all of the EU's store regions for a year.

FAQ

Which distribution model is cheapest in the EU?

There's no single answer; it depends on revenue volume and channel. For small-scale developers eligible for SBP, the reduced 15% rate on in-app IAP is still competitive. For high-volume developers with technical capacity, Web Distribution + 5% CTC is theoretically the lowest commission burden, but extra costs kick in — store operations, payment infrastructure, and lost discoverability.

When does web distribution make sense?

It makes sense for developers with high transaction volume and the engineering capacity to build their own payment/tax/customer-service infrastructure. Apple's own page states the risk explicitly: payment/billing issues and tax administration shift to the developer, and it becomes harder for Apple to provide support/refunds. The chosen combination also can't be changed for 12 months.

How does the small business program work under the new terms?

SBP members (along with Mini Apps and Video Partner Program members) get the reduced rate across all three commission regimes: 15% on IAP, 10% on in-app alternative payment, 10% on link-out. Eligibility calculation includes associated accounts' proceeds; CTC has no separate rate line for participants.

Can I change my chosen payment path later?

No, not for at least 12 months. Apple requires developers to keep their payment option combination fixed across all of the EU's store regions for 12 months — treat this decision as a hard-to-reverse commitment from day one.

What does it take to open an alternative marketplace?

The legal-entity/EU-establishment requirement is gone, but starting October 1, 2026 you need to meet one of seven criteria: D&B score, public trading, venture capital, accountant audit, exempt-entity status, a $1 million letter of credit, or one million first-installs annually. Apps distributed outside the App Store must also go through notarization.

Has the EU Commission approved these new terms?

Not in the sense of a formal compliance ruling, but the Commission hasn't stayed silent either: on August 18, 2026 it said it welcomed the changes, with a spokesperson adding that it's not currently considering periodic penalty payments and is instead monitoring the measure. On September 8, 2026, 18 organizations countered that the terms still violate the DMA.

Conclusion

The distribution decision in the EU is no longer a single "IAP or not" question — it's an architectural decision built across four paths based on your revenue profile and carried for 12 months. Don't decide before running the numbers with your own figures, testing the disclosure-sheet friction, and adding the reporting/support burden to your operations. For the full breakdown of the changes and the early-adoption decision matrix, see Apple's new terms in the EU; for strategies to grow App Store revenue, see Earning $1M on the App Store; and to offset the discoverability losses that come with Web Distribution, see the App Store Optimization guide.

Sources

• Apple Developer News — EU terms announcement — the official August 18, 2026 announcement, spelling out CTC and the effective date verbatim.
• Apps in the EU — Apple Developer — removal of the legal-entity requirement, financial stability criteria, notarization, and the 90-day travel exception.
• Payment options on the App Store in the EU — the full commission table for the four paths, monthly reporting requirement, disclosure sheet obligation.
• App Store Small Business Program — the $1 million proceeds threshold and program requirements.
• MacObserver — 18 organizations' DMA letter — September 8, 2026, the objection led by the Coalition for App Fairness.
• European Publishers Council — open letter — signatories' Article 5(4) argument.
• Courthouse News — Commission statement — the August 18, 2026 statement.
• Article19.org — call to defend the DMA — an advocacy perspective against the new terms and discussion of DMA Article 5(4).