IAPs or In-App Purchases allow users to exchange real money via the relevant app store or other payment methods in exchange for consumable items, non-consumable items, and subscriptions.
Mobile applications took the world by storm largely due to the Apple Store release in 2008. In those early days downloading mobile apps typically cost an upfront cost; these apps were sometimes referred to as premium apps. It wasn't until 2009 when the mobile app Angry Birds was released on the app store with a price tag of $0.99 that everything changed. Angry Birds held the record for the fastest-selling mobile game in history with over 50 million downloads in just 35 days.
Fast forward two years to 2011 and the creators of Angry Birds released an entirely free version of the application with in-app purchases (IAPs). It did not take long for the mobile development world to take notice and follow suite. Now, in 2022, nearly ever mobile app is "free to download" with IAPs and advertisements as the primary means of compensation for app publishers.
There are four major types of IAPs:
Despite Android claiming the lions share of the market in 2022 for mobile devices, iOS users tend to spend far more per user than Android.
Why is this? Well iOS devices are more dominant in regions of the world where there is a higher GDP such as the US, Canada, and Japan compared to Android which is much more popular in developing markets like Africa, India, and Southeast Asia.