Banks will pay a fee to Apple for every transaction made with the company’s freshly unveiled mobile payments solution Apple Pay, reports Bloomberg. Apple has reached an agreement with banks, including JPMorgan Chase, Bank of America, and Citigroup, to receive a share of the more than $40 billion banks generate annually from swipe fees, sources familiar with the matter say.
Under deals reached with banks individually, Cupertino, California-based Apple will collect a fee for each transaction, said one of the people, who requested anonymity because terms aren’t public. While that gives the tech company a share of the more than $40 billion that banks generate annually from so-called swipe fees, lenders expect to benefit as consumers spend more of their money via mobile phones and other digital devices, the person said.
Apple has inked a partnership with three big names in the industry Visa, MasterCard, and American Express to kick start its mobile payment platform. Just a side note: Visa and MasterCard handled roughly $3.32 trillion in purchase transactions last year in the US alone, according to the companies’ data.
While the company has specifically highlighted that it won’t charge users, merchants, or developers for Apple Pay transactions, someone has to pay a fee, and that will be the banks, according to the sources.
Existing mobile payment solutions such as PayPal Here, Square, etc. charge merchants a single fee for every swipe, which is usually between 2.70% and 2.75%. The sources couldn’t say how much Apple will charge banks, though.