Apple Pay Transactions Said to Earn Company $0.15 Per $100 Transaction

Earlier in the month it was reported Apple was able to negotiate lower fees from banks for its mobile payments platform, Apple Pay. Now, according to sources familiar with the matter, The Financial Times reports it has the exact number of what Apple will net from its new partnership with banks and credit card issuers.

Sources say Apple will get a 0.15% cut from every $100 transaction, meaning the company will earn 15 cents. Just think of how many people from the US will be using Apple Pay from the 800 million iTunes account holders with credit cards. The high volumes could mean the start of a new revenue stream for Apple:

They are also paying hard cash for the privilege of being involved: 15 cents of a $100 purchase will go to the iPhone maker, according to two people familiar with the terms of the agreement, which are not public. That is an unprecedented deal, giving Apple a share of the payments’ economics that rivals such as Google do not get for their services.

Dickson Chu, chief product officer at start-up Ingo Money, who had previously worked at PayPal and also on Google Wallet, said “That makes Apple Pay unique,” followed with “It’s somewhat surprising that Apple was able to negotiate something Google couldn’t,” referring to Google Wallet, the latter’s mobile payment platform yet to take off.

Apple Pay includes partnerships with eleven of the biggest card issuers in the U.S., which own 83% of the market. Over 220,000 stores including places like McDonald’s, Walgreens and Starbucks have plans to accept Apple Pay.

Walmart, Best Buy and Target Not Part of Apple Pay

Walmart, Best Buy and Target will not be part of Apple Pay as these companies have joined the Merchant Customer Exchange, which is a retailer-backed tech group which uses apps as a form of payment on iOS and Android devices, instead of NFC, reports the Wall Street Journal.

The mobile wallet app set to be piloted in 2015 will be called CurrentC and will rely on existing POS hardware scanning QR codes within the app displayed on customer smartphones.

In an interview with Reuters, Best Buy said it has no plans to be part of Apple Pay:

“At this point we have no plans to accept Apple Pay,” Best Buy spokesman Jeff Shelman said

As for the existing banking partners Apple managed to get on board, one unnamed chief executive from payment company told the Financial Times it was surprised banks had agreed to Apple’s terms, after what the latter did to the music industry.

Negotiations for Apple Pay were led by iTunes chief Eddy Cue, which were said to have had secret talks with banks and credit card issuers for over a year. As Apple Pay was being developed, Apple leveraged ‘fear’ over partners if they tried to talk too much about the project.

However, one bank executive said Apple Pay “still puts us at the centre of payments”. The premise is Apple Pay will drive up transaction volumes and revenue, while reducing fraud through the payment platform’s security protocols with Touch ID and its implementation of tokenization.

Apple is basically replacing the plastic credit card but not mobile payments. If enough users jump on Apple Pay and it picks up steam, those on the outside looking in will definitely want to be included to play ball.


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