Japan's Mobile Games Turn to External Payments as App Store Competition Law Approaches

Eleven of 16 leading games offer payments outside app stores

At least 11 of the 16 top selling Japanese smartphone games from domestic companies have adopted external payment websites, allowing players to buy items outside payment systems controlled by Apple and Google. The figure, from a 2024 survey, amounts to nearly 70 percent of the titles examined.

The financial incentive is substantial. Apple and Google charge commissions of up to 30 percent on transactions through their payment systems, while external settlement services can charge as little as 5 percent. For developers, that means more of each purchase can reach the company making the game. Players may receive discounts or extra items when developers share the savings.

Mixi Inc. provides a concrete example. The company introduced external payments for Monster Strike in August 2023 and says users can purchase about 5 percent more items through that route than through the previous payment model inside the app.

As of August 23, 2025, this shift is taking place ahead of the full implementation of Japan's Act on Promotion of Competition for Specified Smartphone Software. Passed in June 2024, the law is scheduled to take full effect by December 2025. It seeks to open competition in app distribution, payments and other essential smartphone services.

Japan's smartphone game market is estimated at more than 1 trillion yen, about $6.8 billion. Changes to how money moves through that market affect developers, payment providers and players, while also making Japan a significant test of efforts to reduce the control large technology companies hold over digital marketplaces.

Why developers are moving purchases to the web

Apple's App Store and Google Play have served as the main gateways for downloading smartphone games and buying items within them. Their payment requirements have tied access to these platforms to commissions that can reach 30 percent of each transaction.

Apple and Google argue that those fees support security, privacy and platform maintenance. Developers who object to the charges see them as a substantial cost that reduces profits and limits their room to offer discounts or experiment with prices.

External payment services change that calculation by allowing purchases through websites outside the game. A player buys an item or service through a site run by the developer or a payment specialist, instead of completing the transaction through Apple's or Google's payment gateway.

Digital Garage and GMO Tech are among the settlement service providers helping Japanese developers use this approach. Their work includes processing payments, providing security and managing compliance with Japanese regulations.

The survey also found that 11 of 12 domestic game makers had adopted external settlements for their leading titles. That company figure measures a different group from the 11 of 16 games: one counts developers, while the other counts individual titles.

Lower processing costs give developers more flexibility over promotions and pricing. Monster Strike's additional purchasing value illustrates one way to share the benefit with players. Other developers may use the savings to support their businesses or offer discounts, depending on their decisions.

What Japan's smartphone law will change

The Act on Promotion of Competition for Specified Smartphone Software, also referred to as the Mobile Software Competition Act (MSCA), targets the rules major platforms impose on businesses and users. Its central aim is to make competition possible where control of smartphone software gives a platform substantial power over access and payments.

The law covers operating systems, app stores, browsers and search engines. An operating system runs the phone; an app store distributes software; a browser opens websites; and a search engine helps people find information. Control of these services can influence which competing products a user can reach.

Under the MSCA, designated major platform operators will face prohibitions on several practices:

• Requiring developers to use the platform's own payment system for purchases within apps.
• Blocking alternative app stores or browsers.
• Preventing developers from directing users toward external payment options, a practice known as anti-steering.
• Using data collected through their platforms to give their own products an unfair advantage.

Anti-steering rules matter because an external payment option has limited practical value if a developer cannot tell players about it. Allowing a game to direct users toward another checkout gives that payment service a clearer opportunity to compete.

Designated providers must also let users change default settings easily, avoid unfair discrimination against app developers and submit annual compliance reports. A default is the service a phone uses automatically until the user selects something else.

How the competition watchdog will enforce the rules

The Japan Fair Trade Commission (JFTC), the country's antitrust watchdog, will oversee enforcement. Its role is to monitor whether designated companies follow the new requirements and investigate conduct that restricts competition.

Penalties can reach 20 percent of relevant turnover, rising to 30 percent for repeat offenses. Turnover means revenue from the business activity covered by the penalty calculation. Certain breaches can also bring criminal sanctions.

The JFTC has established a new division to investigate major information technology companies and is expanding its digital expertise. That preparation reflects the practical demands of examining app distribution rules, payment arrangements and the treatment of competing services.

Annual compliance reporting will require designated providers to explain how they are meeting their obligations. Public consultations and feedback mechanisms are also being used to refine implementation, with competition, security, privacy and innovation all part of the discussion.

The changes have developed over several years:

• August 2023: Mixi introduced external payments for Monster Strike.
• June 2024: Japan passed the Act on Promotion of Competition for Specified Smartphone Software.
• 2024: A survey found external payment websites in use for at least 11 of 16 leading Japanese smartphone games from domestic companies.
• August 23, 2025: Developers and payment providers are adjusting ahead of full implementation.
• By December 2025: The MSCA is scheduled to take full effect.

The schedule gives developers, platform operators and regulators a period to prepare. The account of the law's rollout gives December 2025 as the deadline for full implementation without specifying a day.

AppPay and the companies behind external checkout

Digital Garage Group's AppPay is one of the services emerging as developers seek alternatives to traditional app store payments. It enables users to buy game items from multiple companies outside their apps, with lower fees than those charged by traditional app stores.

A service serving several game companies can give external purchases a shared payment channel. Developers gain another way to sell items, while players gain another place to complete a purchase.

Digital Garage and GMO Tech handle the payment work that developers would otherwise need to arrange themselves. Processing a transaction involves more than collecting money: the provider must manage security and meet relevant Japanese regulatory requirements.

Fees as low as 5 percent make these providers attractive to developers seeking to retain more revenue. Their expansion is expected to put further pressure on Apple's and Google's position in Japan's mobile payment market.

External checkout also gives developers more control over prices and promotions. The opportunity is concrete, but each company still has to decide how much of its savings to pass on and how to make the purchase process convenient for players.

What players and game makers stand to gain

Japanese developers have responded positively to the prospect of more payment choices. The survey's finding that 11 of 12 companies had already adopted external settlements shows that the move was underway before the law's full implementation.

Industry associations and information technology organisations have endorsed the legislation as a way to encourage innovation and fairer competition. Removing restrictions on payment choices can give developers more freedom to choose business partners and set the terms of their sales.

Players may gain through discounts, bonus items and competition between payment providers. Mixi's statement that Monster Strike users can buy about 5 percent more items gives a specific example of how a change in payment costs can affect what a customer receives.

Greater competition may also encourage providers to improve the experience of making a purchase. Developers need checkout services that players can use comfortably, while providers need enough participating games and customers to sustain their businesses.

The wider changes extend beyond payments. Easier access for alternative app stores could increase the variety of apps and services available, while simpler changes to default settings could make competing browsers and search engines easier to choose.

Security and privacy remain central concerns. Apple and Google have long argued that their closed payment systems protect users against fraud and data breaches. As purchases move to external services, developers, providers and regulators will need safeguards that maintain consumer trust.

Why some critics want narrower rules

The Information Technology and Innovation Foundation (ITIF), a global think tank, has warned that broad regulation can impose substantial compliance costs and slow innovation. Its position is that measures against conduct that restricts competition should also allow legitimate business practices and efficiency gains that benefit consumers.

In its feedback to the JFTC, ITIF called for more specific limits and greater room for companies to justify their practices:

The guidelines should be more narrowly tailored to address specific, non-hypothetical harms, allow for broader company justifications (including IP compensation and efficiency), and include safe harbors or carve-outs to reduce compliance costs.

IP means intellectual property, such as protected software or other creations. Safe harbors and carve-outs are provisions that identify conduct permitted under specified conditions or exempt particular activities from a rule. ITIF's argument is that clearer boundaries could reduce the cost of determining whether a business practice is allowed.

Other concerns focus on what happens after the rules take effect. Critics argue that platform operators could pass regulatory costs on to consumers, potentially raising prices. They also warn that a more fragmented collection of payment services could create confusion or security risks.

An opinion piece published in Japan Today expressed a broader objection to government and court intervention in how platforms develop:

The future of the internet is being shaped in courts and government agencies, which should be a concern for everyone... Platforms evolve best through market-driven trial and error, not regulatory mandates.

These objections form part of the debate over implementation. Japan's gaming and information technology sectors have nevertheless shown cautious optimism, viewing the law as a corrective to platform dominance and a chance to create more room for competition.

Europe and the United States provide comparisons

Japan's legislation sits alongside efforts in the European Union, the United Kingdom and the United States to address the power of large digital platforms. The methods differ, but app distribution and payment restrictions are recurring points of dispute.

The European Union's Digital Markets Act (DMA) has required Apple to allow app stores operated by other companies and alternative payment systems. Implementation has been contentious and slow, with resistance accompanying changes to the business models of Apple and Google.

The DMA covers a broader range of digital services than Japan's MSCA. Japan's law concentrates on operating systems, app stores, browsers and search engines, giving its competition framework a narrower smartphone focus.

In the United States, the legal battle between Epic Games and Apple produced a ruling that Apple could not prevent developers from linking to external payment options. Apple was not declared a monopoly in that case.

Epic Games is set to relaunch Fortnite on the United States iOS App Store with alternative payment options following court victories against Apple's anti-steering policies. The company also plans to expand the Epic Games Store to Japan once the new law takes effect.

Epic's plans connect the payment debate with competition over distribution. An alternative checkout changes where a purchase is processed; an alternative app store changes where a game is obtained. Japan's legislation addresses both parts of that relationship.

Payment problems extend beyond app store commissions

Some Japanese developers, particularly those making games for adults, have faced difficulties receiving payments from foreign platforms such as Steam because of banking policies and regulatory obstacles. Their experience shows that gaining access to a sales platform is only one part of getting paid.

A developer also depends on the payment and banking services that move money from a customer to the business. Restrictions at those stages can create problems even when a game has found a place to sell.

These difficulties add another concern to the debate over external payments: competition and compliance have to work together. More payment choices can help developers, while banking policies and regulatory requirements continue to shape which transactions can be completed.

Japan's new law is being watched internationally because of the size of its mobile game market and the strength of its enforcement measures. A successful opening of competition could encourage similar reforms elsewhere and increase pressure for more choice in digital commerce.

The coming months will involve adjustments by all sides. The JFTC will continue refining guidelines and enforcement strategies using industry feedback and international practices. Developers will explore payment partnerships and business models, while platform operators prepare for their obligations.

Players can expect more choices in how to pay and potentially better prices or more items for their money. Maintaining security and privacy, and sharing the benefits of lower costs broadly, will be central to whether those changes improve everyday purchases.

The immediate milestone is full implementation by December 2025. Until then, the expansion of external checkout already shows how strongly developers are responding to the prospect of keeping more revenue and gaining greater control over sales.

Key Points

• At least 11 of 16 leading Japanese smartphone games from domestic companies use external payment websites, nearly 70 percent of the titles surveyed.
• Eleven of 12 surveyed domestic game makers have adopted external settlements for their leading titles.
• Apple and Google charge commissions of up to 30 percent, while external settlement services can charge as little as 5 percent.
• Mixi introduced external payments for Monster Strike in August 2023 and says users can purchase about 5 percent more items.
• Japan passed the MSCA in June 2024, with full implementation scheduled by December 2025.
• The JFTC will enforce rules covering payments, app stores, browsers, search engines and operating systems, with financial penalties reaching 30 percent of relevant turnover for repeat offenses.
• Digital Garage, GMO Tech and AppPay are part of the expanding external payment market.
• Epic Games plans to bring its store to Japan after the law takes effect, while security, compliance costs and consumer value remain central issues.