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Apple Negotiates Lower Transaction Fees With Credit Card Issuers for Mobile Payments Initiative

MacRumors

MacRumors

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Original poster
Apr 12, 2001
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As part of its upcoming payments initiative, Apple has reportedly negotiated deals for lower credit card transaction fees with several credit card issuers. According to Bank Innovation, Apple has entered into agreements with American Express, JP Morgan Chase, Citigroup, Capital One, and Bank of America.

The banks have agreed to allow all of Apple's transactions to be conducted as "card present," a set fee charged when a customer uses a card in a physical retail location. Typically, there's also a higher "card not present" fee that's charged when a card is used online, due to security issues. Apple's also managed to secure a lower "card present" fee on top of that, cutting its costs further.
Beyond that, Apple has also managed to bump down the actual "card present" rate by 15 to 25 basis points, according to people with knowledge of the talks. Normal "card present" discount rates, which are shared by issuers and networks but determined by the network, are about 1.5%, which means that Apple appears as though it will get around a 10% discount on the processing rate it will pay. Last quarter, Apple generated $4.5 billion of iTunes revenue -- this implies that Apple will save at least $27 million as a result of these deals with the banks. Of course, more revenue volume is expected upon launch of Apple's payments venture.
Click to expand...
Apple has reportedly been able to negotiate this lower rate by ensuring banks that transactions will be secure, both through the use of the NFC chip which reports location, and through Touch ID, which will be used to authenticate transactions.

In addition to signing deals with several financial institutions, Apple has also managed to secure deals with major credit card companies Visa, MasterCard, and American Express, and it's also been speaking with various retailers about its upcoming payments service.

Rumors have suggested that Apple's payment service will allow iPhone owners to use their devices to make payments both online and in retail stores, possibly linking credit cards to existing iTunes accounts. Apple is expected to announce its mobile payments initiative during its September 9 media event.

Article Link: Apple Negotiates Lower Transaction Fees With Credit Card Issuers for Mobile Payments Initiative
 
Article Link
https://www.macrumors.com/2014/09/04/apple-low-fees-credit-card-issuers/
M

Milese3

macrumors 6502
Aug 11, 2014
301
34
Southampton - United Kingdom
You see, like the tablet, Apple is doing what it does best. Instead of inventing the tablet, it revolutionised the tablet industry and made people want one.

With NFC, Apple may not be the first to use it, however, they're likely to change the way people use it- enhancing it, for the better.
 
markyr17

markyr17

macrumors 65816
Apr 8, 2010
1,186
92
This is very exciting :D If apple does it right, paying with smartphones may become the norm.
 
F

forcesteeler

macrumors 6502
Oct 1, 2007
280
590
They got the discount because of TouchID, which has never been successfully hacked yet so its easy revenue for Banks and Chargebacks will not be major factor.
 
M

monaarts

macrumors 65816
Jan 16, 2010
1,168
51
Kennesaw, GA
If this is true I think it confirms Touch ID is coming... The card not present additional fee is used for the banks to recoup losses because of the increased chance of fraud and therefor loss for the bank. I'd think the only way the banks would agree is if there was an increased security to ensure fraud isn't possible.

Matter of fact, if this is the case it would make my credit card more secure than using the actual credit card. iPhone/iWatch + fingerprint security > credit card with a signature
 
O

osaga

macrumors 6502
Jun 11, 2012
454
170
Milese3 said:
You see, like the tablet, Apple is doing what it does best. Instead of inventing the tablet, it revolutionised the tablet industry and made people want one.

With NFC, Apple may not be the first to use it, however, they're likely to change the way people use it- enhancing it, for the better.
Click to expand...

Thanks captain obvious
 
jrswizzle

jrswizzle

macrumors 603
Aug 23, 2012
6,107
129
McKinney, TX
Hmm perhaps we'll see my "swipe and scan" payment method afterall.

Swipe your wrist (iWatch with NFC) across a payment terminal. Scan your fingerprint on your iPhone for authentication.

Of course, if you don't want to purchase an iWatch, the process can be done solely on an iPhone (swipe the iPhone).

REALLY looking forward to this. :cool::apple:
 
lolkthxbai

lolkthxbai

macrumors 65816
May 7, 2011
1,426
489
This great news! More incentive for people to move forward with Apple's mobile payment plans!
 
A

AppleHater

macrumors 6502a
Jun 9, 2010
788
104
I love the way Apple handle business. Unlike some other competitors that just throw a new technology in, they actually establish the full flow that users can actually use it from day one.
 
N

ny3ranger

macrumors regular
Feb 10, 2008
106
0
Hmm didnt think about that one. Wonder if when you are buying something in your mac and need to put in credit card information. You can use your iOS touch ID to verify that payment information over to the mac. That way its "in person" even when you are buying something online.

Or new macs will also have touchID built in.



MacRumors said:
[url=http://cdn.macrumors.com/im/macrumorsthreadlogodarkd.png]Image[/url]


As part of its upcoming payments initiative, Apple has reportedly negotiated deals for lower credit card transaction fees with several credit card issuers. According to Bank Innovation, Apple has entered into agreements with American Express, JP Morgan Chase, Citigroup, Capital One, and Bank of America.

The banks have agreed to allow all of Apple's transactions to be conducted as "card present," a set fee charged when a customer uses a card in a physical retail location. Typically, there's also a higher "card not present" fee that's charged when a card is used online, due to security issues. Apple's also managed to secure a lower "card present" fee on top of that, cutting its costs further.Apple has reportedly been able to negotiate this lower rate by ensuring banks that transactions will be secure, both through the use of the NFC chip which reports location, and through Touch ID, which will be used to authenticate transactions.

In addition to signing deals with several financial institutions, Apple has also managed to secure deals with major credit card companies Visa, MasterCard, and American Express, and it's also been speaking with various retailers about its upcoming payments service.

Rumors have suggested that Apple's payment service will allow iPhone owners to use their devices to make payments both online and in retail stores, possibly linking credit cards to existing iTunes accounts. Apple is expected to announce its mobile payments initiative during its September 9 media event.

Article Link: Apple Negotiates Lower Transaction Fees With Credit Card Issuers for Mobile Payments Initiative
Click to expand...
 
vpro

vpro

macrumors 65816
Jun 8, 2012
1,195
65
markyr17 said:
This is very exciting :D If apple does it right, paying with smartphones may become the norm.
Click to expand...

I certainly hope NOT! EVER! Losing a wallet is a huge enough hassle, losing your entire life on a phone, that is being resold in the black-market for pennies, oh my goodness gracious God help us all.

I only pay in gold chains or nuggets still - seriously!


I love you all!
 
dugbug

dugbug

macrumors 68000
Aug 23, 2008
1,865
1,926
Somewhere in Florida
ny3ranger said:
Hmm didnt think about that one. Wonder if when you are buying something in your mac and need to put in credit card information. You can use your iOS touch ID to verify that payment information over to the mac. That way its "in person" even when you are buying something online.

Or new macs will also have touchID built in.
Click to expand...

I would love to have my aluminum apple keyboard get touchid, if anything to unlock 1password for me :)
 
markyr17

markyr17

macrumors 65816
Apr 8, 2010
1,186
92
vpro said:
I certainly hope NOT! EVER! Losing a wallet is a huge enough hassle, losing your entire life on a phone, that is being resold in the black-market for pennies, oh my goodness gracious God help us all.

I only pay in gold chains or nuggets still - seriously!


I love you all!
Click to expand...

I fear you've missed the point of Apple's security. 2 Thing I have to say about this

1. Apple's security IS nop notch. Requiring TouchID for purchases, I presume.
2. You're never liable for any fraud using credit cards. The credit card companies take care of that.
 
M

MacLC

macrumors 6502
Oct 18, 2013
414
272
markyr17 said:
This is very exciting :D If apple does it right, paying with smartphones may become the norm.
Click to expand...

Even in Asia where NFC-based payments are way ahead of the US market, people prefer paying in cash. This is nice and all, but cash is still the best.

The number one advantage of cash aside from security is the fact that paying with cash helps the payer stay aware of payments.
I personally have switched months paying with either all cash or all credit. Looking back I found that I saved more money and spent less when I paid with all cash than with all credit. I dare anybody to try the same test and I guarantee that they will get the same results. I'll probably get a new Mac next year and I will be paying for it in cash.
 
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