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

[the8thark]

It's not a liquid. It's a great many pieces of solid matter that form a hard, floor-like surface.

Better tell that to Disney who invented the money swimming duck.

----------

Ever notice how some places don't accept American Express? It's because they charge a higher fee. That fee makes retailers unwilling to contract. In the case of debit being run as debit, the merchant may or may not pass on a service charge. It varies by merchant. When you hit credit, they pay fees just as they would with Visa, typically around 2.5-2.75%. If that goes up too much, you're less likely to see strong adoption. I really hate that practice.

The merchant is more likely to deny the service if the fee it too high (ie American Express) and less likely to absorb the see. So in that respect you're correct. The fee Apple charge will probably affect adoption rates.

 

[djorn2k]

Fair enough!

Apple spent a ton on software/hardware engineering to solve these banks' problems. Why shouldn't they be willing to pay for that?

Why should Apple create a new payment system and give it away to banks for free?

I don't understand the knee-jerk reactions to a good thing--for us as users first and foremost.



According to the article, the banks stand to make more money, which is WHY they are willing to pay Apple a tiny fee.

They'll make more money because credit cards will now be easier and safer than before, so people will use them more. There's no need to look for "evil hidden fees" when the profit motive of the banks is unchanged and simple.

Banks also stand to lose less to fraud.

So why are people stating as fact that banks will lose money if they don't add new fees, hidden or otherwise? What's your source of such dire certainty?

Did you have a cup of coffee yet? Please don't be amazed and justify this crappy service. Ultimately, we individual are going to pay for the cost of this new services. What do you prefer saving 2-5 % on the cost of the item for using your phone or carry a physical card. Let me put it this way. The more you look at it Apple and many other companies want us to become like iWall-e. Go ahead and use this crappy payment system.

 

[iPadPublisher]

The banks will pass that fee onto us customers. I wonder how much this fee will be as we'll be paying it.

I don't think this will result in a new fee. Transaction and so-called "per-swipe" fees are already a part of the international payments ecosystem, and are shared amongst the card issuers, payment gateways, and transaction networks. Apple will simply be taking a bit of the card issuer share for growing their transaction volume, which is why they're working deals with each card issuer.

Apple, I think, will be perfectly happy with a torrent of nickels vs. risking less banks on board with a greedier take.

 

[the8thark]

Fair enough!

Apple spent a ton on software/hardware engineering to solve these banks' problems. Why shouldn't they be willing to pay for that?

Why should Apple create a new payment system and give it away to banks for free?

I don't understand the knee-jerk reactions to a good thing--for us as users first and foremost.

According to the article, the banks stand to make more money, which is WHY they are willing to pay Apple a tiny fee.

They'll make more money because credit cards will now be easier and safer than before, so people will use them more. There's no need to look for "evil hidden fees" when the profit motive of the banks is unchanged and simple.

Banks also stand to lose less to fraud.

So why are people stating as fact that banks will lose money if they don't add new fees, hidden or otherwise? What's your source of such dire certainty?

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.

 

[ebouwman]

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

Nnooooooo.

The retailer is already charged a fee to use your credit or debit card. Debit is a flat fee I believe but I know for a fact credit is 3-4% of the transaction cost. Even looking at your debt card, see that interac symbol? I almost guarantee you interac is taking a slice of the debit card pie.

What we will be seeing is that the whole transaction pie will get divided up differently now. We MAY see a transaction fee but that will go to the merchant (making prices adjust slightly).

It's possible that there will be no change in merchant fees and that apple will be taking a slice of the bank's cut. Any bank not willing to pay apple on apples terms would be in a bad spot because I know I would change banks or credit cards....

If you're so upset about transaction fees then USE CASH. Not every feature can satisfy every user. If you don't find the terms of service for apples payment thing THEN DONT USE IT.

 

[bigchrisfgb]

Depends if they can use touch ID as authorisation, then I can't see a problem with exceeding the £20 limit.

Our Banks might want to do their own thing though.

Since Apple already has agreements with Visa, MasterCard, Capital One, and Amex in the USA who together issue 99.9% of debit and credit cards in the UK then I can see it only being a matter of time before the agreements are extended to the UK.

 

[TouchMint.com]

Go AAPL stock go!!!

 

[ebouwman]

Since Apple already has agreements with Visa, MasterCard, Capital One, and Amex in the USA who together issue 99.9 of debit and credit cards in the UK then I can see it only being a matter of time before the agreements are extended to the UK.

All you need is one bank to agree and the rest will HAVE TO accept or loose customers. Simple.

 

[jon3543]

Better tell that to Disney who invented the money swimming duck.

Anything can happen in cartoons. That's why I like 'em. However, let Peter Griffin be the example of why you don't try to emulate them.

 

[peterh988]

In the UK the limiting factor of NFC is a £20 maximum bill/total, for obvious reasons.

Would Apple Pay overcome that, or am I still limited to £20 payments? That is, if it reaches the UK.

I'd assume it would have to be, otherwise there'd be no point in having the system in their own Apple Stores. There's not much you can buy in there for under £20!

 

[MentalFloss]

Lol at people dumping their stocks today.

Yea, finally a good chance to buy Apple stocks again at a relatively low price. Just put in an order. When the news spreads that Apple forced banks into paying fees to them, the stocks will go back up again.

And I just know how the stocks will jump when Apple announces another preordering record next week.

 

[Arndroid]

Piss poor attempt at a joke.

***********

The banks will pass that fee onto us customers. I wonder how much this fee will be as we'll be paying it.

Actually because apple will provide several additional layers of security the banks will be losing less money to fraud. Banks lose less fraud money, apple gets a piece of the action, retailers get discounted processing fees.

It is win-win-win. And I am confident google wallet will not be able to automagically jump on the train. This goes for all non apple pay NFC transactions.

 

[bigchrisfgb]

All you need is one bank to agree and the rest will HAVE TO accept or loose customers. Simple.

I'm not sure the banks are the ones making the deals with Apple, it seems to be more like card issuers. Anyway, Apple has a great relationship with Barclays in the UK, they are the ones who provide Apple financing. They were also one of the first to start offering NFC debit/credit cards.

 

[TopToffee]

Because these banks which agreed to use the old model of credit cards. The rest of the world has moved on a long time ago. Credit cards - especially with the magnetic stripes - are very poorly and more and more rarely used when you live in Europe for example. There are a lot of people owning a credit card for the sole purpose of being able to shop online. Because many online stores just do not allow other cards than VISA, MC and Amex. But the fees you have to pay are horrible. This has started to change the past years, just the same as it started to change about 20 years ago in real life. More modern cards are accepted (especially debit cards, not credit cards) in many online stores which are free of fee just the same way as you do not pay fees when you use such cards in stores. You pay a fixed amout per year for the bank to account your money, that's it. I did not use my VISA for more than a year now and as there is no other use for that piece of plastic in the real life, people start to abandon these cards alltogether.

I did not pay fees per transaction for the past 20 years. Why should I now?

You completely misunderstand me. Yes, you and I don't pay any fees for using our debit/credit cards. The fees come from the merchant, to the bank. THAT is where apple will take its slice from.

 

[danielowenuk]

Glad apple added the option for payment, without NFC I would have been tempted to go elsewhere... however...

NFC is all over the place, I can already use my contactless card in McDonalds drive through, so why do they have to enable apple pay?

It strikes of apple adding an extra layer of security, with no additional function for the end user, other than restricting the countries and banks it can be used with.

 

[Michaelgtrusa]

Not surprised too hear this but it make sense.

 

[MentalFloss]

It strikes of apple adding an extra layer of security, with no additional function for the end user, other than restricting the countries and banks it can be used with.

"Extra layer of security"

"No additional function for the end user"

I somehow fail to see how one can reconcile both of these statements into one sentence.

 

[Velin]

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.

This isn't correct. Consumers absolutely are paying the fees, which are passed through by merchants to you and I.

And you can see this in action, directly, when making a four- or five-figure purchase at a jewelry store or auto dealership, for example. Jewelry stores will often discount your purchase from 1.5% to 3% if you pay in cash, essentially refunding you the interchange fee. And this is true for both online and bricks/mortar purchases. Same is true at many used dealer lots, you just need to ask (and they love people who pay in cash).

Wall Street banks earn enormous sums off interchange fees. Billions upon billions flow to them every year. And it comes right out of consumer's wallets; merchants are merely the middleman by which the fee is extracted.

And this is why I try to pay in cash for many everyday transactions. Doing my part to combat these pernicious fees. Also, I've no problem with Apple earning a piece of the fee, I'd rather Apple get the money than these banks.

 

[Arndroid]

They'll make a good bit, but I'm not sure it'll be that huge, in a relative sense. Given that the entire market for these fees is $40B annually and Apple already makes more profit than that in a year. And they will only be getting a (probably small) percentage of those fees, from a percentage of those customers (what those % are, we don't know yet, but it won;t be all of them).

Apple nets a billion a year on smart watches, a billion on payment processing. A billion here, a billion there it all adds up.

 

[andy9l]

its only 20 because when someone steals your contactless card they dont need any id or additional codes of any sorts to make transactions obviously you see why that would be the reason to set the limit at only 20 pounds.



there is absolutely no reason not to allow iphones' secure payments to have limits.

That's why I said 'for obvious reasons'...

If the £20 limit is enforced by the banks alone, then Apple Pay could overcome that. If it's enforced by the payment devices at the checkouts too, then we have a problem.

I don't know the answer. It was a question.

 

[Arndroid]

Not if you don't buy anything

----------

Yes, and won't it be great when someone hacks into your phone and starts buying all kinds of stuff?

With your fingerprint. Which is required for apple's advanced security NFC along with other features tracked by the phone.

----------

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

No. Apple's fee will come out of the processing fee which will be lowered due to apple security measures reducing fraud.

 

[andy9l]

I'd assume it would have to be, otherwise there'd be no point in having the system in their own Apple Stores. There's not much you can buy in there for under £20!

This is true!

Fingers crossed. The £20 limit is so frustrating in London. NFC is everywhere, but 'London tax' makes it almost pointless. Even in cafés...

 

[Velin]

I'm not sure the banks are the ones making the deals with Apple, it seems to be more like card issuers.

Banks, by and large, own the card issuers. That "credit line" given to you? Yeah, that's a bank or credit union. As for Visa and Mastercard, they are public companies -- with large ownership by, you guessed it, banks. Visa and Mastercard do not extend credit, they merely process payments, and skim that interchange fee, which goes right into bankers' pockets. Before their IPOs, Visa and Mastercard were owned by banks and credit unions.

 

[Arndroid]

Just think of how many phones will need repairing / replacing as well as people swing them out to swipe them whilst trying to gather their shopping and drop them. I have fumbled my credit card a couple of times so something as heavy as a (larger) phone with my thumb rests only on the bottom?

Even more revenue.

Where are you shopping where you hold everything in your arms while making payment?

 

[ebouwman]

It strikes of apple adding an extra layer of security, with no additional function for the end user, other than restricting the countries and banks it can be used with.

Gets a few cards out of my wallet... Now I'll remove the NFC function from my debit/credit cards because it's horribly insecure... With the apple watch I won't even have to reach into my pocket... Online payments without loaning out my card number. Less susceptible to that fraud thing where the fraudster swaps out a card reader so they can harvest the info to use later...

There are lots of good tidbits for the end user as far as I can see.