Apple Pay Details: Apple Gets 0.15% Cut of Purchases, Higher Rates for Bluetooth Payments

[charlituna]

Not as much as I initially expected, but they'll still make a killing, exponentially, as more retailers sign on.

I suspect that is the point. Apple had likely been considering some kind of payment system for a while but how to get partners to sign on. Well this EMV requirement is the perfect thing. And because of this requirement it will be easy to get tons and tons of transactions which will add up for them to more than enough money to pay for the efforts.

 

[tito2020]

believe bluetooth on iphone has to be enable to talk to the watch

 

[BC2009]

What does the headline mean when it says higher rates for bluetooth payments? What bluetooth payments are they referring to? Apple Pay is NFC right?

When is bluetooth used? The article is confusing...

My question exactly. This sounds like Apple considered making this available on the iPhone 5s at some point and backed off it. iPhone 5s has Bluetooth LE, but not NFC. iPhone 5s also has Touch ID and a secure enclave (which sounds like same thing as the "secure element").

Maybe the banks did not trust the bluetooth protocol as much and would not give Apple the "card present" rates and so they made Pay an iPhone 6 exclusive.

The only other thing that I am not certain of is that it kinda sounds like the Secure Element is able to directly send the payment token to the NFC antenna without going through the operating system.

Touch ID authentication prompts the "secure element" to send the token and cryptogram to the merchant.

If that's the case, then the iPhone 5s would not have that functionality since Bluetooth would have to go through the operating system. The wording of this article makes it sound like the OS never gets the payment token.

 

[AdonisSMU]

How does this affect bit coin?

 

[cowbellallen]

Who's paying that .0015% fee?

Are processors going to up the rates on all merchants, or will they give up their piece of the pie?

 

[charlituna]

They just need to get their foot in the door. Walmart and Best Buy are not on board so it will be interesting to see at what point they cry uncle and fall in line

But will it really matter. I mean it's just two companies, big ones but are they really that mighty in the grand scheme of things. I don't have a walmart around but there is a best buy and it seems like it's always empty when I go there.

 

[avonord]

Many banks nowaday outsource their credit card processing to TSYS. Apple is partnering with TSYS, and so many banks can support Apple Pay. It's just a matter of those banks signing the agreement with Apple.

http://www.marketwatch.com/story/tsys-supports-apple-pay-2014-09-09

If you look at TSYS's annual debit/credit card processing volume, they process over a trillion dollar a year.

http://en.wikipedia.org/wiki/TSYS

If they get 0.0015%, that's $15 million. Pocket change for Apple, but TSYS only operates mostly in North America, I believe.

 

[joeblough]

we'll probably all pay for apple's cut in the form of lower cash backs, etc.

in truth it should pay for itself if it cuts down on fraud. the CC companies are already passing the cost of fraud on to us. that's why they don't take it seriously.

 

[Michael Scrip]

Perhaps using Apple Watch? Or maybe some kind of non-NFC solution for iPhone 5S?

It would be cool if the iPhone 5S could use Apple Pay... as there are already over a hundred million iPhone 5S out in the world right now.

BUT... the iPhone 5S does not have the Secure Element or whatever... which is the hallmark of Apple Pay's security.

 

[larrylaffer]

Gotta love the LA vs SF ticket in their passbook. Whoever's going to that game tonight and wearing orange is going to be disappointed.

Go Doyers!

 

[charlituna]

Well, $1 billion worth of purchases equal to meager $15,000 check to Apple.

I think it's nice that Apple is essentially making nothing to push this long overdue payment technology used in some countries to rest of the world.

But how much will they make on the iPhones and Watches that folks will buy because they can use this feature. I suspect that is the real reason they are being so 'generous' with the fees they are getting.

 

[IJ Reilly]

It should not be named Apple Pay.

It should be called Pay Apple.

 

[nutmac]

But how much will they make on the iPhones and Watches that folks will buy because they can use this feature. I suspect that is the real reason they are being so 'generous' with the fees they are getting.

From what I understand, it's compatible with Android too.

 

[Michael Scrip]

But how much will they make on the iPhones and Watches that folks will buy because they can use this feature. I suspect that is the real reason they are being so 'generous' with the fees they are getting.

Exactly.

Apple didn't really make a lot of money from selling songs on iTunes... they basically covered the cost of hosting, bandwidth and credit card charges.

Apple made the REAL money on selling the iPods themselves.

 

[decksnap]

With a ponzi scheme like this, no wonder apple's stock has gone up

Somebody doesn't know what a ponzi scheme is.

 

[tito2020]

To me this is a promotion rate it will eventually go up

 

[gnomeisland]

One needs to ask why Apple even is doing this payment system, and why they are netting such low percentage numbers. In the end, it's ONLY another value-add to get people to buy iPhones, and thus be converted to the Apple ecosystem. The relatively small amount Apple nets from the transactions more than pays for all of their development efforts that went into building out this infrastructure. So in the end it's a wash for them in terms of capital outlay and opex costs, the banks win because it's more secure, retailers work because it's more secure (and liability for fraud shifts to them later next year), and customers like it because it's fun, secure, flexible, and (eventually, in time maybe) let's them thin out the contents of their wallets. I sure as hell know I would embrace anything that lets me de-Costanzafy my wallet!

Amen! Not a big fan of anything about the the iPhone 6 . . . except NFC and Apple Pay. Massive credit card theft is so rampant that if this actually works and IS that secure it is a big deal. I'll keep me on the platform and I think get a number of people to buy in/upgrade.

 

[bushido]

There are two possible outcomes of that comment...

(1) you are trolling
(2) I just lost my faith in humanity

I am even more shocked by the three people actually voting it up

 

[kdarling]

BUT... the iPhone 5S does not have the Secure Element or whatever... which is the hallmark of Apple Pay's security.

A Secure Element is a part of standard NFC payments, not an invention of Apple. That's why they're often built into NFC chips, but can be elsewhere.

My question exactly. This sounds like Apple considered making this available on the iPhone 5s at some point and backed off it.

That sounds reasonable. Or maybe it's for use with the Watch.

iPhone 5s also has Touch ID and a secure enclave (which sounds like same thing as the "secure element").

It's not the same thing, though could be used as one in a pinch.

The only other thing that I am not certain of is that it kinda sounds like the Secure Element is able to directly send the payment token to the NFC antenna without going through the operating system.

You are correct. The SE runs its own apps (like SIMs do) and is the only part of the device allowed to send/receive EMV payment info over the NFC comms. The OS itself is not involved. Again, this is why the SE is usually built into the NFC chip itself, and the only entity allowed to change the SE code is a trusted service manager like First Data (who is apparently the one for Apple, and was the one for the first Google Wallet).

If that's the case, then the iPhone 5s would not have that functionality since Bluetooth would have to go through the operating system. The wording of this article makes it sound like the OS never gets the payment token.

If an older model iPhone was using the Watch for payment, then the phone would not have an SE, correct. (Not sure if the Watch has one.) However, if an SE is not available, you can fall back on the Secure Enclave or other trusted execution environment.

Or use an SE in the cloud, like Google does. (Google does NOT store the card info locally, which has the advantage of letting you use any Google Wallet device that you've logged into.)

 

[Rainbow Evil]

So you guys in America are only just getting chip and pin cards (or EMV cards as I'm seeing it called a lot) so have therefore been having to sign every time you use your card in store and yet you still get NFC payments with Pay probably long before us? This world confuses me sometimes...

 

[osofast240sx]

i went to Chase bank today behind the teller they changed the main board from:
Chase to Chase|

wow!

 

[Mac32]

The fact that Apple's payment charge is based on a % cut of the purchase means I'll never use this service. That's just too greedy. It should have been a very small static fee like how VISA charges used to be. No thanks, Apple.

 

[Michael Scrip]

A Secure Element is a part of standard NFC payments, not an invention of Apple. That's why they're often built into NFC chips, but can be elsewhere.

Thanks!

But my point was... the iPhone 5S doesn't have it.

 

[X-X]

Apple didn't really make a lot of money from selling songs on iTunes... they basically covered the cost of hosting, bandwidth and credit card charges.

What? Yeah, maybe 10 years ago for 6 months.

Apple's iTunes earns about $3 billion a year in music sales.

They take 30% of every song sold on iTunes.

 

[bushido]

So you guys in America are only just getting chip and pin cards (or EMV cards as I'm seeing it called a lot) so have therefore been having to sign every time you use your card in store and yet you still get NFC payments with Pay probably long before us? This world confuses me sometimes...

Funny I tied to upvote your post but it keeps looking up the browser on my piece of s ... secondary android phone. It's a sign I guess