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

[Breaking Good]

Processing credit cards was never free. Whatever it was, we were almost certainly paying it before.
The fees were just going to a different place.

Anywhere from 3% to 7%.

Merchants usually have to pay a set amount for each transaction as well as a percentage of the overall transaction. On top of that there is usually a monthly maintenance fee they must pay.

There is a reason why Target gives 5% off for using their Target credit or debit card to pay.

This will make cents (get it) if the system ultimately cuts out Visa and MasterCard allowing merchants to essentially directly debit your bank account.

 

[Velin]

As in many countires, a published price must be declared including all additional costs and this is just not looking good.

I am not a banking expert but I am a consumer. And I see that paying with credit card costs me more than with a pin'd debit card or cash. That's what I see and that's how I decide what to use.

And what is interesting about that is, at least here in the U.S., Visa and Mastercard prohibited merchants from lowering their prices if a customer paid with cash.

That's right: even if using cash, the Visa/Mastercard merchant contracts explicitly forbade merchants from passing on the savings. Truly disgusting -- and of course none of this is open or obvious to the consumer. In the U.S., we don't have any type of point-of-sale disclosure about these pernicious fees.

I need to do some research to see if this is still the case after the Durbin amendment, i.e. are merchants still contractually forbidden from offering two sets of prices, one for cash, another for credit cards.

 

[simonmet]

The banking industry is the scum industry of the planet IMO. And don't fret people, you WILL end up paying for that Apple tax on them.
I'll be interested to see how they get on with the UK banks and regulators, then again it would be nice to see a contactless payment system.

In my country and bank I pay no account keeping fees and no debit card fee. I pay no bank fees whatsoever because I don't have a credit card but I pay for most of my purchases on my debit card using NFC (which has a $100 lit). My bank also has a huge network of ATMs so I'm usually always within a few minutes walk from one.

The way I see it the banks are happy to pay Apple a fee because of the reduced cost of supplying NFC capable cards and the inherent reduction in risk of fraud. It's a win win win situation for consumers, the banks and Apple! Well done Apple! It's a shame it took so long but better to be late and get it right than early and wrong.

Apple please bring ApplePay to Australia ASAP! We're probably the most advanced country in terms of existing NFC infrastructure. It's almost universal.

 

[Velin]

This will make cents (get it) if the system ultimately cuts out Visa and MasterCard allowing merchants to essentially directly debit your bank account.

Wait, are you saying Applepay will cut out entirely the Visa/Mastercard/Discover/Amex monopoly concerning point-of-sale credit transactions? How is that possible? Or are you drawing a distinction between credit and debit transactions?

 

[rootboy]

Savings from less fraud

Apple will take part of existing fee that banks already charge merchant.

The security of Apple's approach should result in less fraud. It could be the case that this savings could be the source of Apple's transaction fee.

 

[Lancer]

Are we surprised by this?

Its a service, of course there will be fees, just depends how much.

 

[Velin]

I can check out much faster. Given there are not cash discounts payijg with cash does not save money

Giving 100% of the transaction to the merchant, and denying vampire financial institutions their interchange fee, is worth the minor inconvenience. If more of us thought this way, we could make a serious impact on the outrageous fees imposed by the credit card industry. Be the change we seek to elicit, one consumer at a time.

 

[tdmac]

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.

I am a merchant and that doesn't seem to be the case with debit. I don't have a pin pad so debit cards are run as CC. However the fee is still very small. So it seems to be run through still as Debit. This could be determined by the processor.

 

[Velin]

I am a merchant and that doesn't seem to be the case with debit. I don't have a pin pad so debit cards are run as CC. However the fee is still very small. So it seems to be run through still as Debit. This could be determined by the processor.

If you are in the U.S., this is a recent change due to the Durbin Amendment. Wall Street fought like hell to defeat the Durbin Amendment, which considerably lowered the cost of debit transactions. Not credit transactions, but debit transactions. This was a blow against the heart of parasitic financial institutions.

If you read the media around this time, Congress was sick to death of all the lobbyists swarming the Capitol concerning debit interchange. It was a happy, happy day when that amendment was signed into law.

And I would much rather the sales transaction proceeds go to you, the merchant, versus some insipid Wall Street bank.

Further, I've no problem with Apple collecting a very small fee for processing a transaction. And, if Applepay will skip Wall Street entirely, and simply debit one of my accounts, I am going to buy an iPhone 6 for this feature exclusively, because I despise interchange fees.

 

[Cougarcat]

Somehow I don't think my credit union is ever going to support this...

 

[roadbloc]

Because blackberry and everyone else provided insecure NFC implementations with high fraud rates.

To use NFC on my BlackBerry you need to enter your device password, switch on NFC, scan it and then confirm with your BlackBerry ID password. Other than the replacement of passwords with thumb prints, how is what Apple have done any way more secure?

Been using NFC to pay for stuff for a good two years now. Not once had a fraud issue. My bank automatically caps payments at £20 and monitors my transactions for anything suspicious. And I can call them anytime to disable it.

How exactly has Apple made this already secure process anymore secure?

 

[0098386]

I've still not got an answer for this and I'm still curious!

In that "informercial" type video where they showed the woman buying something on her card, was that supposed to be a comedy? Why was the card swiped? Why did she have to show ID? I've never had to do any of that when buying on my card. I put the card into the slot, enter my PIN and that's it.

 

[Medic311]

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

actually the banks will pass the fee onto the retailers through increased swipe fees. what Apple just did is increase swipe fees for all businesses that accept credit cards

 

[the8thark]

actually the banks will pass the fee onto the retailers through increased swipe fees. what Apple just did is increase swipe fees for all businesses that accept credit cards

And the retailers will pass the fees onto the customers.

 

[dmcdougle73]

I am just curious how returns work. Most places I just give my receipt and the most ey goes right back toy card without having to show them the cars again. In this situation the stores supposedly don't get my card info, so how do they know how to refund me. Am I now going to have to show them the card? And since supposedly apple is not saving any transaction data, who will k ow what card I used? Its a silly thing but returns now are fairly simple to do and I have seen nothing how it will work when using your phone.

 

[Mr. Gates]

That's all they said about NFC

What about tap to share photos and contacts ?

And all the other cool stuff NFC can do like tap to pair a Bluetooth device ?

Is this only for payments right now ?

 

[Popeye206]

Wow...

A tax system inside a tax system inside a tax system inside...

It's already there… Merchants pay fees for accepting credit cards. Transaction fee's and processing fee's. Apple will be most likely be taking a small part of the transaction fee. Much like a credit card processor already does. There are already middle-men in this process and Apple will just be one of them.

From a business standpoint, this a huge deal for Apple if it's consumers use it.

 

[Ap0ks]

I've still not got an answer for this and I'm still curious!

In that "informercial" type video where they showed the woman buying something on her card, was that supposed to be a comedy? Why was the card swiped? Why did she have to show ID? I've never had to do any of that when buying on my card. I put the card into the slot, enter my PIN and that's it.

Chip & PIN is still very new to the US, I don't even think all banks have issued chipped card yet (I'm not in the US so can't say for certain).

Which is why ApplePay seems to be great in the US, rest of the world probably not as big a deal.

 

[SBlue1]

Wow...

A tax system inside a tax system inside a tax system inside...

-----------
Someday in the future we'll pay more taxes for virtual money management than to the government.

Virtual money management is cheaper than paper money management depending on the company and system.

Estimating the need, doing the ordering, delivering small notes and bag loads of change every other day, splitting it up zo our different stores, collecting the income every day and doing all the paperwork costs my company around two percent of the income. Letting the credit card company do all the work costs us less. Unless the customers pay by Amex, they charge us more and pay us later. :roll eyes:

 

[gnasher729]

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.

The limit is there for a good reason, because if you steal my wallet with my debit card, you can use it for NFC straight away - for more expensive things, you need my PIN number.

I'd say it depends on how much security there is. How much you need to steal off me to use it. It looks like you need my iPhone and my finger print, which is a lot more security than you just needing my iPhone, so I could imagine a higher limit.

 

[Medic311]

And the retailers will pass the fees onto the customers.

yes that is the end result, however you said the banks pass the fees onto customers which wasn't an accurate statement

 

[cdmoore74]

Wait, does this mean that banks will just turn around and charge us higher fees to compensate for the difference?
And with my Target Red card tied to my debit card I get a 5% discount. Will that discount not work with this type of payment system? 5% off a $500 iPad is $25. And I also shop there year round spending more than that.

 

[SBlue1]

I am just curious how returns work... In this situation the stores supposedly don't get my card info, so how do they know how to refund me.

Apple does not store the information, they are just the middle man. Your credit card company has the information. Guess you will have to print your credit card receipt to get a refund.

 

[pubwvj]

So the new iOS has payment abilities to store my credit cards but it sounds like that is for when I'm physically at a store. 99% of my 'shopping' does not involve going to a physical location but is over the web via my laptop computer or in a few cases over my landline phone. There is no cellphone service around here. I never shop via my iOS device. I very rarely shop in person. I would rather just give my credit card number to the sales person over the phone or web. I've almost never had a problem with fraud and in the extremely few cases the credit card company took care of the issue. That's what you pay the fees for.

 

[gnasher729]

I am just curious how returns work. Most places I just give my receipt and the most ey goes right back toy card without having to show them the cars again. In this situation the stores supposedly don't get my card info, so how do they know how to refund me. Am I now going to have to show them the card? And since supposedly apple is not saving any transaction data, who will k ow what card I used? Its a silly thing but returns now are fairly simple to do and I have seen nothing how it will work when using your phone.

The store knows what they sold you, and the bank knows what they paid for. It's quite possible and not very difficult to have a system where the phone stores information that doesn't allow the phone to _recover_ data, but to verify data. Just like visiting a website like MacRumors, which has stored information that allows it to check that you typed in the right username and password, but isn't capable of finding out your password.