Apple Crippling Iran’s E-commerce Startups

Just three weeks ago, Apple started removing some of the Iranian apps from the App Store including Digikala and finance related apps. Now Iranian E-commerce startups have caught off their domestic payment options as well.

The Raid Started With DigiKala

It started off by Apple removing DigiKala from the App Store which shocked many overnight that why should Iran’s largest E-commerce company be removed from the App Store. In the recent year many the rate of M-commerce and purchases via the mobile interfaces have risen significantly. Due to the fact that the estimate number of iPhones in Iran is around 6 million with an average number of 100k new devices registered, iPhone users in Iran are a significant target market for Apple. We also need to have in mind that an average iPhone user’s basket size is usually larger than an Android user in many cases. Removing Iranian apps such as DigiKala from the App Store made a big buzz around the world considering the recent political events occurring after the new U.S. administration took office.

Apple sent this message to one of the Iranian Startups once their app was removed from the App Store:

“Unfortunately, there is no App Store available for the territory of Iran. Additionally, apps facilitating transactions for businesses or entities based in Iran may not comply with the Iranian Transactions Sanctions Regulations (31CFR Part 560) when hosted on the App Store. For these reasons, we are unable to accept your application at this time.

We encourage you to resubmit your application once international trade laws are revised to allow this functionality.“

According to the Iranian Transactions Sanctions Regulations (31CFR Part 560), the Central Bank of Iran and other Iranian banks are under this sanction law and all transactions to U.S. entities are blocked and dealt with. The major problem is that Iranian entities are also not allowed to use international payment methods, resulting to using internal and domestic payment options as they are the only option available to the Iranians.

Iranian E-commerce Apps Can Not Accept Payments with Their iOS Apps Anymore

Following these recent events, many Iranian startups have trouble accepting payments directly. They have to go to endless difficulties to accept payments. Just yesterday, Snapp, one of the biggest Iranian startups with one of the highest number of transactions had to disable it’s payment gateways to its users because of Apple’s restrictions on Iranian companies. Ride-hailing apps are services used daily by millions of Iranians in their daily commutes witch makes one wonder why U.S. sanction target the daily routine and well being of the Iranian people.

The note above is from Snapp’s app, Iran’s largest ride-hailing company which says:

“Due to the recent restrictions with iOS applications, unfortunately paying online for rides is not possible at the moment.”

The company is forced to redirect the user to alternative payment options such as the out-dated USSD technology. Many other apps have also disabled their online payment options and are using different methods of payment not directly associated to Iran’s SHETAB and SHAPARAK network which are categorized as Iran’s banking system which ultimately fall under the sanctions. Iranian PSPs (Payment Service Providers) which are usually associated to banks, facilitate debit card payments for user by providing online payment gateways to companies to pay online using the Shaparak network supervised by the Central Bank of Iran itself. Though it seems using these online payment gateways provided by the PSPs is not illegal by any law or bylaws, and they are also not against any of Apple’s terms of services according to some experts.

“As you probably know we did the change. We’re putting ourselves in the safe side because of the recent problems of Digikala and their removal from the App Store. It’s bad for everybody in Iran but we’re doing our best to convince Apple that using Iranian PSPs is not illegal, even according to the Apple’s terms of service,” as expressed by Housein Moradgholi CTO of Snapp on this matter.

Apps like the Iranian podcast platform Sheneto also had to remove its payment option in app and instead is using vouchers sold on its website for purchases.

Will Apple Continue To Make Things Worse For Iranian Users and Startups?

As of now many Iranian startups are taking the necessary precautions to avoid being removed from the App Store the way DigiKala was removed. However if this approach continues, Apple’s reputation in Iran and the Iranian users themselves would be harmed most. Research shows Apple has a 1 billion dollar market in Iran and if sanctions manage to get relieved, Apple will have some reputation reestablishments to do in Iran as it will face some angry users because of these actions.

Related to this story and the sanctions, Amazon may face some penalties because of selling products to Iranians which some of them may have been associated to the Iranian government. As the recent events are escalating, it’s getting harder to predict what will come as the current U.S. administration has also proven to be unpredictable and somewhat irrational.