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

[Kaibelf]

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.

Um.... What? Apple's system is more secure, which means less charge-backs and less theft in the long run. Therefore the banks SAVE money by working in tandem with them on this. They still take the same fee, but share a small portion with Apple. You haven't used the system at all. No one has. However, the banks DO know profit and loss. Exactly why is the system "crappy" to you when you have ZERO experience with it and know very little or nothing about it? Do you think all of today's modern conveniences have been free this whole time?

 

[cdmoore74]

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.

What if you did Christmas shopping for a bunch of family members? Do you get a gift receipt? Maybe the receipt is emailed to you

 

[d0nK]

So, Apple created a way that we can pay them money more easily, and they also charge us a fee to pay them more easily.

Mug us more. Please.

 

[A MacBook lover]

Um.... What? Apple's system is more secure, which means less charge-backs and less theft in the long run. Therefore the banks SAVE money by working in tandem with them on this. They still take the same fee, but share a small portion with Apple. You haven't used the system at all. No one has. However, the banks DO know profit and loss. Exactly why is the system "crappy" to you when you have ZERO experience with it and know very little or nothing about it? Do you think all of today's modern conveniences have been free this whole time?

Just ignore him, there is an unusual amount of bitterness in forum, not sure if it's phandroids, or just competition trying to bring down the community.

Anyone that calls a product trash before actually using is illogical, and should just be ignored. Same goes for people on this forum pushing this myth that it will be more expensive for consumers to use ApplePay vs plastic.

 

[MarcelEdward]

I'm not sure where you live, but there is a reason some gas stations charge less if you pay cash vs. credit card. You have been paying a fee for years. 3% that all merchants must pay to use the credit system.

Gues it is aimed for the US for now.

Here in europe we indeed do not pay with credit cards.
We pay in fact in digital cash, direct from our bank account. (lol, we barely know anymore how real cash looks like )

And yes you can be sure the banks take their slice, they are big money makers.

 

[mtneer]

I am still not clear on this. With a plastic card, there are three entities involved in the transaction between the customer and the merchant: the bank, the card processor (Visa/ MC etc.) and the sale terminal owner.

How will Apple Pay simplify this transaction? Will it simply not inject Apple into the middle man role and increase overall transaction cost, borne by the customer at the end of the day - even if it's indirectly through the bank or the merchant?

 

[g-7]

I wonder, what is the difference between the Apple way and PayWave/PayPass? Oh, right. PayPass/PayWave are actually supported ewerywhere. I don't know about US, but here I can just move my card to the reader, beep, done - no PINs, no nothing. And it's supported in almost every store and in almost every ticket vending machine.

OK, Apple's solution is more secure, but will it really be universally adopted?

 

[RedOrchestra]

Apple will simply be taking a bit of the card issuer share for growing their transaction volume...

REALLY, so iPhone users aren't currently using CCs?

 

[samcraig]

Clearly this product should really be called "Pay Apple"

----------

However, the banks DO know profit and loss.

Are you REALLY sure about that?

 

[J53119]

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.

Plus the fact of the recent security breaches, I'm sure debit cards are even less likely to be used.

I would occasionally use my debit at Wal-Mart if I wanted some cash back with the transaction. I have yet to do that since the Target breach and hearing the horror stories of checking accounts being wiped out.

----------

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

Yeah and how much are these NFC terminals going to cost a small business?

But if Amazon is cheaper they won't even bother because the consumer always forgets overhead that costs a business.

 

[lolkthxbai]

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.

Only time will tell but I believe that restriction exists only because there is little to no security feature involved with using contact-less cards in the UK so once ApplePay is introduced in the UK that should theoretically go away.

 

[Tiger8]

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

Depending on what plastic credit card you have, that fee is typically 2.5 - 3.0% for Visa and Mastercard, I think 4 or 5% for American Express. Banks already charge that fee to the merchants.

That's why many merchants refuse to take AmEx or Discover (high fees), and that's why some gass stations have two prices for cash and CC

The fact that Apple worked with the banks means merchants will still pay the same fees, but the bank will give Apple a cut from their existing fees. This is not different than the 1 - 2% 'cash back' rewards you get with most cards.

 

[D.T.]

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

That won’t be the end result. Seriously, talk to someone who’s involved in retail (like an actual purchasing manger type role). Some of the reasons it won’t are in the excellent quote below:

Um.... What? Apple's system is more secure, which means less charge-backs and less theft in the long run. Therefore the banks SAVE money by working in tandem with them on this. They still take the same fee, but share a small portion with Apple. You haven't used the system at all. No one has. However, the banks DO know profit and loss. Exactly why is the system "crappy" to you when you have ZERO experience with it and know very little or nothing about it? Do you think all of today's modern conveniences have been free this whole time?

 

[DominusNovus]

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.

You realize that after the Durbin Amendment made it into Dodd-Frank, that all the banks just shrugged their shoulders and raised their other fees to make up for it, right?

 

[markyr17]

So, Apple created a way that we can pay them money more easily, and they also charge us a fee to pay them more easily.



Mug us more. Please.

I'm so confused why everybody on this thread seems to have this idea in their head.

Read the article

Merchants already are charged a fee per transaction by the banks. Apple is simply going to get a cut of that fee. Will that fee go up? Maybe. But it's not our fee. And most likely the merchants and banks will see what Apple is doing as a good thing to help tone down the rampant credit card fraud that the banks have to absorb.

I'm doubting the fees will increase because of Apple getting their share. They've done all the work (supposedly) to make it all secure.

 

[Digital Skunk]

Is Apple Pay compatible with the hardware that some stores and gas stations have to wave cards (or other phones I assume) over the terminal to pay? Or does it require special Apple hardware?

I hope it's the former, because of most of the stores around me already have those machines.

From what I am reading and gathering it's using NFC (even though Apple was late to the game, I am SO glad they are using NFC) so the hardware that's already there will work with it just fine.

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.

True, but I think it'll be negligible considering most of the people that will be using this don't mind paying VISA, et al fees.

The others saying that it's moot are forgetting that each transaction adds up, so they should really keep what you say in mind. If the banks are going to charge me a foreign transaction fee of $3 or $5 depending, then I don't want to use Apple Pay for candy bars and such.

Also, and more to helping support your point, apps like Check that "pay bills for you" also charge a fee. When I first used it the fee was modest, then it grew to about $3.95 per bill. That times ten bills and that $31 starts to be missed.

 

[sfwalter]

Dumb Question: Can I use credit/debit cards from one of the partner banks? I mainly use my debit card but its from more of a regional bank. In my case its BBVA/Compass.

I have a Chase credit card. If so I guess I will just start using that card as my main card.

 

[tjl3]

This was so perfectly ripe for Apple and, imho, the biggest of their product announcements today. The whole payments industry is so completely ripe for exactly what they are doing. There really is no reason for credit card #'s if you think about it. How many times have we all been voicing our credit card #'s over the phone, aloud, etc.

It's impressive that Apple was able to get agreements from the major payment industry players, but what were they really prepared to do? It's analogous to digitization of music, but on a much grander scale.

~paul

Well said Paul! Apple is barely scratching the surface, and this could very well overlap mobile commerce and eCommerce. Imagine never transmitting CC info, personal info when you check out! Win win for consumers, merchants and banks! Your identity is safe, merchants save on cost, banks lower their risk and chargebacks. Your info isn't even stored on a cloud. Furthermore, this could do to commerce what Amazon One Click did for eCommerce! Click checkout, bring up the aPayment interface, select your card, scan your fingerprint and done.

 

[sfwalter]

Dumb Question: Can I use credit/debit cards from one of the partner banks? I mainly use my debit card but its from more of a regional bank. In my case its BBVA/Compass.

I have a Chase credit card. If so I guess I will just start using that card as my main card.

I found my own answer on the Apple Pay web page: "Add your debit and credit cards from these banks.*" So looks like my regular debit card won't be supported. I might have to start shopping around for a checking account from one of the support banks.

 

[fermat-au]

When Tim was going on about other companies failing because they just try to make money out of these sort of payments, I genuinely thought he was about to announce Apple had created an open standard...

Nope, they are just trying to make money from it, just like those 'bad' people he was describing, LOL.

Nope. Never. The greatest threat to Apple are open standards.

 

[sfwalter]

So what retailers are missing for you? For me its:

Walmart
Home Depot
Dunkin Donuts
CVS (Although I could just as well go to Walgreens)
Dillards
Barnes and Noble
Central Market (regional grocery store like Whole Foods)
Lowes
Office Depot
Bed, Bath and Beyond

 

[mdlooker]

I'm so confused why everybody on this thread seems to have this idea in their head.

Read the article

Merchants already are charged a fee per transaction by the banks. Apple is simply going to get a cut of that fee. Will that fee go up? Maybe. But it's not our fee. And most likely the merchants and banks will see what Apple is doing as a good thing to help tone down the rampant credit card fraud that the banks have to absorb.

I'm doubting the fees will increase because of Apple getting their share. They've done all the work (supposedly) to make it all secure.

This is what I was just thinking. Fees are already in place..always have. Apple is simply getting paid for this innovation as they should. And IF..a big IF, there is an additional fee for using the machine, I'm quite sure the option to pull your credit card out and pay for your merchandise will still be present.

I just wish more merchants accepted AMEX. I think it's great if it will lead the way in diminishing CC fraud/Identity theft.

 

[sfwalter]

I'm switching back from Android in part because I think Apple got mobile payments right with this.

Welcome back!

 

[Tiger8]

I am still not clear on this. With a plastic card, there are three entities involved in the transaction between the customer and the merchant: the bank, the card processor (Visa/ MC etc.) and the sale terminal owner.

How will Apple Pay simplify this transaction? Will it simply not inject Apple into the middle man role and increase overall transaction cost, borne by the customer at the end of the day - even if it's indirectly through the bank or the merchant?

Valid question, from what I understood CC process is a 'waterfall'; once merchant get their 97%, each party (terminal / bank / credit card brand) take their piece of the 3% pie. Apple stuck the deal with the bank so they will get a piece of what the bank gets.

Actually, I think the bank usually settles with the credit card brand later, ti would be something similar

 

[sfwalter]

Lol at people dumping their stocks today.

Why?