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Banks Pressuring Visa to Cut Back on Apple Pay Fees
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I'm seeing a lot of the same comments about how banks should be happy to use Apple Pay as they will deal with less fraud. Problem is, banks don't care. They aren't taking the loss and thus have no incentive to prefer a card with more security. The bank simply takes the funds back from the merchant. It's pretty much always the merchant who ultimately takes the loss, not the banks.
The concession are in relation to patented technology that secures the data and allows them to stay in the game. If apple created their own financial network which it sounds like that was the original plan, most of these players would not be benefiting from the increased use of Apple Pay especially during the pandemic.
In the payment industry that residual income is the standard reward for facilitating business.
There is a difference. If the fees are collected for something the company (Apple or bank) does it's ok. In this case, one may hope that market competition will keep this fee in check. When Apple collects the fee for something they do not do, it's a racket. The same thing happens with the 30% fee in the App Store.
0.15% for eliminating fraud? Seems like some execs are getting greedy and can't see the forest for the trees.
I wouldn’t mind for this to happen, here in Canada it’s mostly VISA and MasterCard having that duopoly with no one in sight attacking them for antitrust or similar endeavors.
If Apple were to rollout their own payment networks I would definitely chip in on that.
Market competition keeping fees(anything) in check is a myth. It’s the excuse used to insert these fees in the first place. I’m not at all against credit cards or Apple Pay and use them for every single purchase, but once someone starts saying market competition will adjust anything it’s well past that belief being even somewhat realistic.
This sound alike Epic with the App Store. Just money hungry even though they make billions
Secure randomized numbers = less fraud
RFID payments = less wear on cards that require manufacturing and shipping.
Apple, Google and Samsung payments also pushed merchants to upgrade POS systems that are more secure, and in many cases earn Visa and other card companies more income too.
Sorry but I don’t feel sorry for CC companies here.
RFID payments = less wear on cards that require manufacturing and shipping.
Apple, Google and Samsung payments also pushed merchants to upgrade POS systems that are more secure, and in many cases earn Visa and other card companies more income too.
Sorry but I don’t feel sorry for CC companies here.
Do you understand that Apple is solely responsible to it’s shareholders and for them to stay in business they have to increase profits EVERY 3 MONTHS FOREVER? Does Apple need it’s cut? If they want to stay in business, hell yes.
I've worked in the credit business for 20+ years and fully understand how it all "works".
Reoccurring payments (subscriptions/automatic payments), once setup, no longer require the intermediary.
Several processors, not just Apple, insist on being the middle man in the transaction even after an auto payment arrangement has been setup. They are really not required and do not provide any additional fraud protection.
Once it's been established that the card presented is legitimate and the transaction is genuine, a transaction token can be established directly between the creditor and the merchant.
These pass through transaction fees cost millions per year. That cost is passed on to the consumer.
These fees pay my salary.
If Apple wants to establish their own card network, they will find out just how costly it is to operate one. Pretty sure they already know that, which is why they don't back their own credit card. They rely on an institutional bank to back up the card and take on all the risk.
Apple is not stupid for wanting the fee, but issuers and banks are not going to renew Apples gravy train for much longer.
If merchants had always taken the hit, we wouldn't have bothered doing chip cards in the US in the first place. After all, issuing them has costs, too.
More accurately, it's "how much security can we actually justify"? And it seems that chip and signature supplemented by mobile payments is enough according to them.
The market rarely makes an impact on fee adjustments in favor of the consumer.
It's typically Congress and federal agencies that end up putting the brakes on.
If it were only that simple.
Fraud prevention measures go well beyond the physical card or mobile wallet.
Fraud prevention is geared around the card holder. An issuer today will know the card holder's shopping habits, income and payment history, demographic data, the list goes on. It's all used to analyze a purchase and flag one for human review if a purchase strays too far from the model's risk parameters.
The level of AI and machine learning used today is substantial in spotting fraud. It's not perfect, but go buy something out of the ordinary that costs over $500. It will get flagged. What action is taken will depend on your profile with the card holder.
FYI, most issuers no longer require signatures... they have long proven to be pointless.
Some card processors still demand it even though the issuer does not.
Apple Pay's sole financial model is a portion of the transaction fees. It will not "live on it's own two feet" if it loses its only source of revenue.
Of course that's part of it. The networks could have just left it at that for card present transactions, though, and passed all the liability onto merchants (much like what happens now for online retailers)--but didn't.
That said, there's enough distrust towards them floating around that I'm not surprised ZIP codes are still required at most chip enabled pumps or that a lot more places still need signature than expected. Not to mention ID checks sticking around a fair bit after chip became a thing before finally (mostly) going away.
Go read a book on GAAP then come back if you still want to argue. Hint: you don't achieve profits through paying taxes.
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I don’t get what the Apple Card has to do with it or why it would upset bank executives… it’s just another Mastercard with a shiny app lol.
I‘d think the contracts for apple pay wouldn’t ignore an issue like this, and it wouldn‘t be beneficial for them to break their contracts since then Apple could just make their own credit card network or buy Amex or discover lol. The thing is, visa and mc have already lost all the power because through their support Apple Pay enabled terminals are everywhere and its supported more and more places online.
i just can’t see it being something they can just stop paying since if it wasn’t part of their terms, then their accounting department probably all about to be fired.
To me apple pay seems more like a paypal competitor than a visa/mc one at this point tho. I don’t quite get their arguments. The credit card networks operating costs relative to their income is just insane and it’s a relatively tiny portion of what the standard fees they charge are. This just seems like more people trying to get gateway access to apples customers for free and then cut out apple lol.
I‘d think the contracts for apple pay wouldn’t ignore an issue like this, and it wouldn‘t be beneficial for them to break their contracts since then Apple could just make their own credit card network or buy Amex or discover lol. The thing is, visa and mc have already lost all the power because through their support Apple Pay enabled terminals are everywhere and its supported more and more places online.
i just can’t see it being something they can just stop paying since if it wasn’t part of their terms, then their accounting department probably all about to be fired.
To me apple pay seems more like a paypal competitor than a visa/mc one at this point tho. I don’t quite get their arguments. The credit card networks operating costs relative to their income is just insane and it’s a relatively tiny portion of what the standard fees they charge are. This just seems like more people trying to get gateway access to apples customers for free and then cut out apple lol.
LOL
Banks are whining about a .15% service fee that Apple receives for payments on purchases made on an secured platform that Apple invented, which Apple distributes on their devices, making it more convenient for consumers to make purchases, that also happens to create new and more varied revenue streams for banks.
And yet they have no problem collecting up to 5% merchant fees for themselves on those same transactions, nor do they have any issue charging customers interest rates anywhere from 15% - 30% along with a never ending list of other fees and charges on top of that!
Banks are whining about a .15% service fee that Apple receives for payments on purchases made on an secured platform that Apple invented, which Apple distributes on their devices, making it more convenient for consumers to make purchases, that also happens to create new and more varied revenue streams for banks.
And yet they have no problem collecting up to 5% merchant fees for themselves on those same transactions, nor do they have any issue charging customers interest rates anywhere from 15% - 30% along with a never ending list of other fees and charges on top of that!
It upsets Bank executives because they are greedy and don’t want ANYONE getting a of their rivers of cash generated by fees, even if it is .15%.
Remember these are the SAME executives that charge merchants 5% for every transaction along with the interest and fees they charge to squeeze every drop they can out of consumers.
Apple will definitely hold their stand. Besides 0.15% is not too much.