In-App Purchases (commonly referred to as Microtransactions, but can also refer to paying for DLC via an in-game interface) typically refers to a video game providing functionality within the game itself to buy items from a store, often directly relating to gameplay. This is usually provided by what has become known across the video gaming industry as a cash shop.
In-App Purchases are themselves not a static feature, but a sliding scale of what can be on offer, depending on the video game and often on what direction the publisher of the video game wishes to take it. In general, In-App Purchases boil down into three main categories as expressed in this table:
In-App Purchase Scales
Pay to Win
Paying real money gives the player direct benefits or items that are otherwise impossible to achieve or obtain.
The only way to obtain the best equipment in the game is to buy it.
Paying real money gives the player direct benefits or items that are otherwise difficult to achieve or obtain.
You can buy a powerful piece of equipment, but this is only available elsewhere via a rare drop, usually from a boss.
Paying real money gives the player tradeable in-game currency, or some other direct economic benefit or advantage.
You buy coins or gold, which can then be traded for items via a cash shop and/or auction house.
Pay for Convenience
Paying real money lets the player skip what would otherwise be a long, lengthly grind.
Buying a level boost.
Paying real money gives the player indirect benefits or items that are convenient and/or timesavers.
Buying a mount that is faster than other mounts.
Paying real money gives the player minor indirect benefits or items that are convenient and/or timesavers.
You buy an item that grants an aura that increases the chance for your profession level to increase when you make an item.
Pay for Cosmetics
Paying real money grants the player access to cosmetic items only available as purchases that are only available from the cash shop.
You buy a silly hat with no stats that can be transmogged from the cash shop.
Paying real money grants the player access to cosmetic items; but there are other ways to obtain them.
You buy a silly hat with no stats that can be transmogged, from the cash shop, but it can also be earned through PvE and/or PvP content.