It’s been a good day for CIBC and RBC debit and credit card owners today, as these two banks were the first to support Apple Pay with Visa and MasterCard in Canada today. Other big banks such as TD, Scotiabank and BMO are set to launch Apple Pay in mid-June.
One reason Apple Pay was delayed, according to the company, was the integration of Interac and their tokenization service to include debit card support. Another delay, was also ongoing negotiations over interchange fees, banks would pay to Apple per transaction.
[Related Reading: HSBC Canada, PC Financial, MBNA Canada, National Bank, Desjardins, Capital One, Tangerine and Chase comment on Apple Pay]
Sources inform The Globe and Mail (paywall) our Canadian banks “have paid a steep price” to be part of Apple Pay when it came to negotiations, instead of what many would believe to be the other way around.
Negotiations for Apple Pay took months, with sources claiming terms of the deal “suggest that the banks were not in the driver’s seat at the negotiating table.” Two sources told the Globe our Canadian banks agreed to 15 basis points—or 15 cents for every $100 transaction made through Apple Pay—for credit cards and four cents on debit cards.
This fee is allegedly similar to what U.S. banks agreed to when they launched support for Apple Pay back in 2014, with some industry commentators saying these banks accepted the iPhone maker’s terms too quickly.
Last April, sources told the WSJ our big Canadian banks had formed a consortium to negotiate with Apple Pay, citing terms of 15-25 basis points for credit card transactions at the time. Looks like Apple managed to bring those ‘down’ to 15 basis points, on par with what U.S. banks are paying for the mobile wallet, if the Globe’s sources are accurate.
Neither Apple nor Canada’s Big Five banks responded to the Globe’s story when asked to comment.
Update: Sources told The Financial Post banks got a slightly better deal on Apple Pay versus U.S. banks, a deal in line with Australia and the UK:
While Apple Inc. will receive 0.15 per cent or 15 basis points on credit transactions — comparable to the widely reported figure for Apple Pay in the United States, which works out to 15 cents for every $100 purchased — a lower fee of four basis points will be applied to credit transactions after an annual payment of 50 cents per card.
The source characterized the arrangement as more in line with the lower fees paid to Apple in Australia and the United Kingdom.
Thanks William!
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I thought the Cdn banks would bring the rate down as a group..
Yeah, doesn’t look like they were able to lower it…maybe if they had Donald Trump as a negotiator!
That deal would be HUUUUUUUUUGE
He’d negotiate a really, really great deal, that would be very, very beautiful, like the wall coming along the US-Mexico border.
I will get a great rate – and nobody gets better rates than me, believe me – and I’ll get them very low. I will get a great, great rate for our consortium, and I will make Apple pay for that rate. Mark my words.
I will never underestimate the power of a great taco bowl from Trump Tower Grill, I hear they are the best from there
CDN banks did get a better deal than American banks since our dollar is so much lower. They are paying about 20% less to Apple once the dollar is coverted.
Good point
wait lets examine that say 1 oz of gold costs $1270 USD and $1630 CAD (current market rate) – if bought with apple pay banks in US would pay apple $1.91 banks in Canada would pay $2.45 –
and at the current exchange rate $2.45 CAD is worth $1.90 USD so they pay exactly the same.
You figure the banks already rip us off in fees, they should be able to afford to pay those couple cents per transaction.
took the words right out of my mouth
They’ll recoup it from us in other ways unfortunately.
It’s insane to think that 15¢ of every hundred dollar purchase is a bad deal for the banks. I’ve paid fees 400x that amount for frivolous reasons, I think they can afford the 15¢
don’t worry, they will pass this cost onto us…. this is what they do…..
I do not believe the Globe and Mail story. I believe the story was published to prepare people for a hike in fee’s. No conspiracy just business as usual.
At first I mis-read that as $0.15 per dollar, which indeed would’ve been ridiculously high.
But if it’s in fact $0.0015 per dollar… that is a *ridiculously* low amount considering credit card issuers charge merchants the equivalent of $0.015 to $0.030 per dollar, literally 10-20x more than what Apple was asking for.
While I don’t care that the banks have to pay Apple, one key point: the Apple Pay fee is on top of the credit card issuer’s fee. This is cumulative, not a replacement.
I don’t understand how this seems sad. Why do our banks in Canada deserve a better rate then elsewhere?
I can’t walk into Rogers and complain about how much cheaper service is in the US (successfully anyways).