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Along with other new App Store Guidelines, it looks like Apple has introduced a new policy that will give App Store users a period of grace before their subscriptions are cancelled in the event that renewal payments fail.
Up until now, if you had an in-app subscription that was set to automatically renew and the App Store was unable to collect payment — for example if your credit card expired or had insufficient funds available or you were relying on a gift card balance — the subscription would be automatically cancelled right away.
This could especially be a problem for infrequent App Store customers with longer-term subscriptions, since if you rarely buy anything from the App Store you might have less of an incentive to keep your payment method updated or your acount balance topped up.
Depending on the app in question, it was usually only a minor inconvenience for users to correct the billing issue and simply take out a new subscription, especially since many developers offered their own internal “grace periods” anyway before actually removing customer data or profiles. However, the lack of a grace period was still an unnecessary nuisance for users, and more important it unfairly penalized many developers.
The New Grace Period
Apple announced the change to developers yesterday, describing it as a solution to “reducing customer churn” and also improving the experience for customers.
Now, when a subscription renewal fails, Apple will keep the subscription active for a specific time period while notifying the user of the failed renewal and trying to collect payment.
This means that users won’t find themselves suddenly cut off from access to important apps, and will instead be given an opportunity to fix the problem and continue their subscription.
How Long Is the Grace Period?
According to details shared by 9to5Mac, the duration of the grace period will be tied to the length of the original subscription, although at this point it appears that it will be 16 days for most tiers, with the exception of weekly subscriptions which will allow for a six-day grace period.
However, the layout of the chart suggests that Apple could at some point choose to lengthen or reduce the grace periods for other subscription tiers.
If payment can’t be successfully collected within the grace period, the subscription will be cancelled in the same way as before. In most cases, however, these timeframes should be more than enough for customers to resolve any billing issues.
Benefits For Developers
While offering a grace period will definitely be an improvement for customers, it will actually make an even bigger difference to the bottom line for many developers. Not only are they more likely to have renewals go through, but they won’t be penalized for customers who have to resubscribe after their subscriptions fail to renew.
Apple notes that developers will need to opt-in by enabling the Billing Grace Period feature via App Store Connect, but points out that there are several benefits to doing so. Allowing for a Billing Grace Period means that when a renewal fails, there won’t be any interruption to the “subscriber’s days of paid service” or to the developer’s revenue, as long as the payment does get successfully collected within the grace period.
Since Apple takes a 30 percent cut of first-year subscription revenue, but reduces that to 15 percent for users who maintain their subscriptions beyond the first year, what this new policy means in practical terms is that failed subscriptions will no longer cost developers 15 percent more than successful renewals would.
The problem up until now has been that if a user’s subscription failed to renew, Apple treated it as cancelled. If the user later chose to resubscribe — even the same day — Apple would see this as a brand new, first-year subscription, meaning that the developer would have to pay 30 percent of that to Apple, rather than the 15 percent they would have paid if the customer’s renewal had gone through successfully — even though in reality the user was already an existing customer. The new policy means that Apple will still recognize the renewal, as long as the customer fixes the billing problem within the grace period.