Mikey Campbell
Adding to rumors regarding Apple's supposed mobile payments solution, a report on Thursday claims the Cupertino tech giant has managed to negotiate lower transaction fees from five credit card issuing banks.
Citing sources familiar with the matter, Bank Innovation says Apple has managed to strike deals with American Express, JP Morgan Chase, Citigroup, Capital One, and Bank of America that classifies payments made through a rumored iOS-based system as "card present" transactions, which come at a lower processing fee.
Unlike "card not present" transactions, "card present" payments command a lower fee reflecting a comparatively low risk of fraud. To obtain "card present" status, Apple supposedly assumed some of the risk by requiring Touch ID for each purchase, while leveraging NFC technology for additional security.
Going further, Apple reportedly reduced "card present" rates by 15 to 25 basis points, equating to a roughly 10 percent discount on processing fees, sources said. The publication offers iTunes as an example, noting Apple stands to save some $27 million if revenues from the digital storefront meet last quarter's $4.5 billion mark.
The company rumored to roll out an iOS-based mobile payments solution that could be tied to customers' iTunes accounts — automatically adding millions of on-file credit cards — meaning gross revenues could balloon dramatically. Importantly, Apple's as-yet-unannounced system will work with all credit card from issuing partner banks.
In addition to issuers, recent reports claim Apple has signed deals with American Express, Visa and MasterCard for the payments , bringing the world's top credit card companies onboard for an apparently imminent launch.
Earlier today, The Wall Street Journal reported that the next-generation iPhone and rumored "iWatch" will both feature NFC-based e-wallet solutions, a technology long-rumored for inclusion in the company's portable lineup.
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32 Comments
Tim's army is a bunch of good negotiators. And, if himself is part of this negotiaing-army, Tim is the best for Apple for coming decade.
Cant wait for Sep 9th.
Could someone ELI5 the way Apple stands to make money on third-party purchases here? Lets say I go to WalMart, and pays my bill say $500 using TouchID/iTunes thru VISA. At which stage does Apple profit? They are obviously taking electronic payment system to a whole another level here with both security and ease. It will become defacto standard, but I fail to see where they profit. Obviously they reduce their cost of VISA,etc transaction costs on iTunes store. But that is just a tiny fish in the sea compared to the $15billion electronic payment market which is much more interesting. The only way I can see Apple profit from this is if they start their own Bank - and using Visa,Mastercard,etc to get everybody onboard only to offer their own competing service. But obviously Visa,Mastercard,etc must have seen this coming miles ahead.
It looks like Apple already has the top banks and credit issuers on board. I'm assuming on day 1 consumers will be able to upload their credit and debit cards to their iPhone 6 for use at NFC terminals everywhere.
[quote name="hydr" url="/t/182099/apple-reportedly-wrangles-lower-credit-card-transaction-fees-for-mobile-payments-rollout#post_2589715"]Could someone ELI5 the way Apple stands to make money on third-party purchases here? Lets say I go to WalMart, and pays my bill say $500 using TouchID/iTunes thru VISA. At which stage does Apple profit? They are obviously taking electronic payment system to a whole another level here with both security and ease. It will become defacto standard, but I fail to see where they profit. Obviously they reduce their cost of VISA,etc transaction costs on iTunes store. But that is just a tiny fish in the sea compared to the $15billion electronic payment market which is much more interesting. The only way I can see Apple profit from this is if they start their own Bank - and using Visa,Mastercard,etc to get everybody onboard only to offer their own competing service. But obviously Visa,Mastercard,etc must have seen this coming miles ahead.[/quote] Well if Apple is able to negotiate down the transaction fees charged from banks to merchants, Apple then can add in their own minimal processing fee. For merchants the transactions would cost the same from cards and iWallet. For banks and card issuers Apple is taking on some of the risk so that they don't have to. For Apple they will be able to earn money on their processing fee for every transaction. That could be millions of transactions by next year, that Apple is profiting from
It looks like Apple already has the top banks and credit issuers on board. I'm assuming on day 1 consumers will be able to upload their credit and debit cards to their iPhone 6 for use at NFC terminals everywhere.
Much like I do right now with my phones already. I'm glad Apple if finally bringing NFC to the iPhones and making this take off in a big way.