Google plans to open its third-party payment system in South Korea

Alphabet’s Google inc said Thursday that it plans to open a third-party payment system in South Korea to comply with the country’s new regulations. The new rules prohibit major app store operators from forcing software developers to use their payment systems.

Google has announced changes to its in-app payment options in South Korea, dealing a major blow to the tech giant’s revenue at a time when regulators around the world are trying to curb Google and Apple’s grip on its mobile ecosystem.

If a user pays with a third-party system, Google still charges the developer a commission, but the fee is slightly reduced to offset the cost of supporting alternative payments.

Fees for publishing apps on Android and Google Play will continue to be based on digital sales on the platform. When users opt for alternative billing, Google will cut developers’ fees by 4%.

The Korea Communications Commission (KCC) had asked the US tech giant to come up with a compliance plan for the new law, which takes effect in September.

In late August, South Korea’s National Assembly passed an amendment to the telecommunications law dubbed the “anti-Google Law” by the media. It would ban large App store operators from forcing software developers to use their payment systems, in effect preventing the platforms from charging commissions for in-app purchases.

Most of the new measures in the amendment went into effect in South Korea in mid-September.

“We respect the decision of the South Korean parliament and are discussing changes to tie in with the new law, including the ability to allow developers selling digital goods and services within the program to opt for other in-app billing systems for their Korean users in addition to Google Play’s internal tools,” Google said in a statement Thursday.

While similar legislation has been considered in the United States and Europe, the bill is the first to mandate such a change for Android and iOS. In the U.S., the issue of Apple and Google’s fee fees for in-app purchases has sparked controversy and even sparked lawsuits between Fortress Night developer Epic and Apple, though Apple has largely won the legal battle.

Google has proposed plans to open up its third-party payment system, but the changes only apply to South Korea, the Korea Communications Commission said. Google plans to implement the new payment policy this year, the commission said.