Apple to Collect Fee From Banks for Every Purchase Made with Apple Pay

[ptb42]

So you think the banks will absorb the Apple see even if it's a net profit to the banks? I am not so sure about that. I think even so the fee will be passed down the chain to the customers.

http://bankinnovation.net/2014/09/apple-said-to-negotiate-deep-payments-discounts-from-big-banks/

[...]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.

A basis point is 1/100 of 1%, or 0.01%. So, on a $100 transaction, Apple would be able to collect 15-25 cents, out of the card processor's merchant fee (which remains unchanged). Multiply that by all the transactions handled by the iPhone 6 (and beyond), and it will be a significant amount, especially if this is expanded world-wide.

 

[Blorzoga]

Are you currently paying fees to use your debit/cc card?

Didn't think so.

It's the merchant paying the fees for the convienience of accepting debit/cc cards.

Ever heard of Square? That's just one example.

Don't be so naive. First of all, merchants are now permitted to charge customers a fee for using their card; secondly, whether the merchants specifically charge the customer a fee or not, the increased cost will be passed on to the customer in the form of price increases.

 

[j005279]

So when you use the Watch to pay via Apple-Pay you can pay without the user's finger print?

My guess is that in order to use the apple watch to make payments, it will first need to be tethered to the iphone via TouchID. Once tethered, you can make payments all day and it's secure because your fingerprint was verified. If someone were to steal your watch the tether would be broken and the payment would decline. if someone were to steal your iphone they would need to use the TouchID for each payment and it would decline. If someone were to steal both your iphone and your tethered watch you could be in for some trouble but that would be the equivalent of getting jumped and having your whole wallet stolen. At that point you would probably have bigger fish to fry but you could quickly have apple deactivate everything.

This being said, the iphone 6 is the ony iphone that will have apple pay due to NFC. The watch works with the 5, 5C, and 5S. I'm wondering if you can only make payments with it with the 5S due to TouchID, or just the 6 due to NFC on the phone.

 

[BigBeast]

Because they do not want to pay a credit card fee there smart.

How is this smart? Most places that are cash only LOSE revenue.

 

[RedOrchestra]

Some of you have trouble grasping this very basic concept...

The customer ALWAYS pays ... it's inherent in EVERY price.

 

[solipsism]

Here's what Apple is proposing

Client-->Debit/Credit Card-->Pinpad-->Apple Server-->Bank-->Visa/Master/Amex

They are proposing clients to totally bypass the payment processor. So instead of paying 0.25$+2% to the payments processor, they will be paying 0.25$+1.25% to Apple/Visa/Banks. Stores will be saving money, Apple will be receiving a small royalty, VISA/MC/AMEX and banks will be receiving the same amount of money.

Payment processing company are the one getting f88k really hard with this.

I'm pretty sure Cook said Apple isn't involved with the transaction at all.

What Apple proposed is: Customer » NFC of Debit/CC data » Payment Company » Bank » MC/Visa/Amex, after which payments done via Apple's NFC setup will get a small percentage sent to Apple on whatever payment schedule they agreed.

 

[KdParker]

Ohh - those cheeky bas****s

nice little revenue stream. Oh yes and ...

Apple is doomed.

 

[tito2020]

Because they have to pay sale city tax end of year if you have a credit card machine .

 

[vipergts2207]

Some of you have trouble grasping this very basic concept...

When there is a credit card fee the MERCHANT pays it.

Those costs are then passed on to the CONSUMER through slightly higher prices. That's the price you pay for convenience.

So yes, the MERCHANT pays it, but we in turn pay it to the merchant, they are not swallowing those costs.

Others and myself have pointed out that these fee markups are recouped with rewards credit cards, unlike with cash. In a years time I get over $600 in cash back by using credit cards.

 

[tito2020]

How is this smart? Most places that are cash only LOSE revenue.

Because thats one less sales tax bill they would need to pay to the city.

 

[Blorzoga]

Yes but now we will be paying the bank fee for using the card and the Apple fee for using Apple Pay.

I suspect Apple will be receiving the fee from the CC companies, and the CC companies are regulated on how much they can charge merchants.

 

[downpour]

Everything he said was accurate. It is an open standard. ANYONE can add NFC to a device for payments.

So anyone can add Pay to their phone, even Android or Windows phones... Don't think so.

That's what I mean by an open standard. Sure NFC tech might be open but Apple didn't just announce that, what they announced will only ever work with closed Apple hardware, it has even got Apple in the name.

The sole purpose of the system is to make more money for Apple, by forcing people to buy their devices if they want to use it, and by charging the banks for the privilege of actually using it.

Really contactless payments should conform to exactly the same standards and protocols no matter what hardware it is running on. Sadly it doesn't look like that will happen now.

 

[KdParker]

Don't be so naive. First of all, merchants are now permitted to charge customers a fee for using their card; secondly, whether the merchants specifically charge the customer a fee or not, the increased cost will be passed on to the customer in the form of price increases.

True.

But wouldn't you notice an increase in the cost when you use your iPhone instead your credit card. What is the retailer going to do? Mark everything up just in case someone might use there phone to pay?

I would just simply go somewhere else if that where the case.

 

[Trapezoid]

Hot dog vendors and stop & robs notwithstanding, almost every place in the US takes CC tender. And these "cash only" places are selling things that still compete with stores around their area that DO take CC tender. The cash only places still sell their goods/food at the same prices as the other stores- you just have less flexibility in how you pay. With the loss of flexibility, at least you have a lower risk of CC fraud since mom and pop shops have much less security.

Its not just hot dog vendors. They might not be national chains but some of the biggest regional stores in nyc don't take credit in some areas. A quick example is kennedy fried chicken. That's one in the bronx that doesn't take ccs. Kennedy's is pretty popular in new York. Same with golden krust bakery. I know one in Brooklyn that doesn't take CC, and golden krust sells product in Wal-Mart.

I'm just saying there are plenty of places that don't take CC.

 

[Blorzoga]

Because thats one less sales tax bill they would need to pay to the city.

That would be known as tax evasion. Last time I checked, it was illegal.

 

[BigBeast]

All kinds of examples of this - merchants that require a minimum for credit card payments, gas stations that have cheaper cash prices vs. credit card prices, merchants that don't take American Express (they charge the highest fee of any credit card), etc etc.

These are not "cash only" places. Additionally, the amount of places that require a minimum payment for CC is such a small percentage of stores that it's not worth even mentioning, and said venues are always mom and pop shops that have a difficulty competing with the prices of surrounding stores that take CC as normal payment.

A FEW gast stations lower the price of gas if using cash, but that is decreasing as well. It wasn't because of the fee associated with the CC, it was because of the lack of fraud protection a few years back.

As for American Express, most places take it, but most people have more than one card, and when a store says they don't take AE, the furnish a Visa or MC. Simple.

 

[solipsism]

If you all really think this is wrong just consider that Apple Stores are such a huge draw for an area that they can negotiate very low lease fees. Despite their relative small size they are anchor stores.

Of course, the property owners will need to make up this loss and will likely want to profit even more from this opportunity so they jack up the rent of the stores surrounding the Apple Store.

 

[RedOrchestra]

The sole purpose of the system is to make more money for Apple, by forcing people to buy their devices if they want to use it...

And that, folks, is THE bottom line.

 

[Trapezoid]

That would be known as tax evasion. Last time I checked, it was illegal.

?? How is it tax evasion. They don't accept credit cards so they don't have to pay extra fees.

 

[Blorzoga]

Because they have to pay sale city tax end of year if you have a credit card machine .

You have to pay sales whether you have a cc machine or not. Duh!!

 

[Chimp Studios]

Definitely need DD to be added.

For me it's (please forgive it these are actually supported)

MicroCenter
BestBuy
DXL (Imma fat guy)
Burlington Coat Factory
Quiznos
Chipotle



The adoption rate wouldn't have to be 90% . . . . not even 70% to be honest. If it was 40%, and just in the places that the target demographic shops then it will be a hit.

Even in this high credit nation of ours we still have to carry cash for various things. Apple Pay just makes it a little easier for us to NOT have to pull out our wallets and swipe and drop it and loose it.

Check out the PNC page about Apple Pay. They pretty clearly state it will work with ANY PayWave card reader.

When making purchases with a retailer who has a contactless payWave terminal, you will simply hold your phone over the terminal and accept the charge with your fingerprint or passcode on the iPhone 6 or iPhone 6 Plus.

 

[Blorzoga]

?? How is it tax evasion. They don't accept credit cards so they don't have to pay extra fees.

The reply was to someone who noted that if you don't accept credit cards (i.e. you're a cash business), you're somehow exempt from remitting sales tax.

 

[AdonisSMU]

what I´m pointing out is a merchant/bank/cc-company is not interesting in losing income...
assuming a transaction is safe, how do you add a layer ontop without adding to the price?

as I said earlier here we have a law basically saying if a product is 100$, thats the price no matter how you pay...

sure using cc is safer than having a lot of cash in your store, but if I´m going to introduce NFC as payment... I´m not willing to lose money on every transaction compared to cc or cash...
and simply raising the price makes my customers choose another store

Very easily... you quantify the savings from fraudulent transactions with regard to credit cards. That what Apple will be able to charge banks and credit card vendors. Additionally, if you can't charge any more than the price where the profit from customers is the highest no matter what you are not maximizing value. There may be some business case for not maximizing value. However, a business will charge the maximum they can that will achieve their business goals regardless of the forms of payment they accept.

 

[Trapezoid]

The reply was to someone who noted that if you don't accept credit cards (i.e. you're a cash business), you're somehow exempt from remitting sales tax.

Ah lol got it...yes that is indeed tax evasion...apologies for jumping the gun

 

[linuxcooldude]

The sole purpose of the system is to make more money for Apple, by forcing people to buy their devices if they want to use it, and by charging the banks for the privilege of actually using it.

You are not forcing anybody into using it if they already have alternatives. They choose to use Apple or use an Android phone.