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Details Emerge Why Apple Pay Skipped Canadian Banks

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Yesterday Apple CEO Tim Cook confirmed via the company’s Q4 2015 earnings conference call Apple Pay would be expanding to Canada, for select American Express cardholders.

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The launch puzzled many non-American Express members, as numbers in Canada are pegged at about four million, compared to over 70 million combined cards from Visa and MasterCard, according to The Globe and Mail, which had sources familiar with discussions detail why Apple bypassed Canadian banks.

Apple reportedly skipped Canadian banks and popular credit card networks “because negotiations were dragging,” sources tell The Globe. 

The Apple Pay launch in Canada, claims a source, was related to a global effort to “negotiate by credit-card network rather than bank-by-bank,” as other sources also noted the “most pointed standoff” was between the iPhone maker and credit card companies.

MasterCard was said to agree to Apple’s terms, say sources. Visa has its own Visa Digital Enablement Program for mobile payments and recently signed Google as its first partner. Google’s mobile platform, Android, has its own competitor to Apple, known as Android Pay.

The Globe postulates American Express may have been ripe for an Apple partnership, as its sales and profit have been declining; the recent exit from retail warehouse giant Costco (they moved onto MasterCard) impacted 10 per cent of American Express’ existing cards.

One source from a Canadian bank said “AmEx is a very small player, especially when you overlay the number of merchants that accept the card,” adding “You can’t really call it an entry strategy, but it’s an interesting deal with AmEx.”

Also, no Canadian bank has an American Express card that is Apple Pay compatible (Scotiabank offers an AmEx card).

Canadian banks are said to have formed a consortium to negotiate with Apple for lower credit card transactions fees, plus address potential security concerns with Apple Pay, as previously reported by the Wall Street Journal.

Earlier this month, TD Canada Trust’s website inadvertently leaked Apple Pay would be “coming soon,” the most compelling evidence to date to suggest a ‘Big 6’ Canadian bank is ready to support the mobile wallet. Other sources claim BMO is ready to launch Apple Pay as well.

Our own little birdies are claiming the last week of November is when Apple Pay will launch here–with support for cards beyond American Express. But don’t hold your breath until we see it.

Currently, only the U.S. and Britain support Apple Pay, which will also expand to Australia later this year, and add support in Spain, Singapore and Hong Kong in 2016.

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