A new report from Sanjay Sakhrani of KBW and detailed by Bezinga claims to share details of Apple’s contract with card issuers for Apple Pay. In addition to sharing details on Apple’s cut of transactions, the report highlights requirements from Apple’s terms and conditions that card issuers must follow to participate in the new payments service.
Among the terms, card issuers reportedly “must allow at least 95 percent of the cards in their portfolio to participate in Apple Pay,” which the report points out might not include ATM or gift cards. Apple previously posted a support document detailing supported card types through initial launch banks. It hasn’t yet, however, updated to reflect a number of additional banks that started supporting the service earlier today.
The report adds that Visa and MasterCard are playing a “large operational role for Apple which extends beyond the security aspect of tokenization.” Some of the specifics from the terms below:
- On behalf of Apple, the networks will collect the portion of interchange owed to the company from the issues and will only then pass along the fees to Apple.
- Issuers must allow at least 95 percent of the cards in their portfolio to participate in Apple Pay, which may not necessarily include gift cards or ATM-only cards.
- Apple has the ability to request up to two times a year that the amounts the issuers pay are accurate. Apple reserves the rights to seek advice from independent auditors to verify accuracy.
- Issuers must supply Apple with various data statistics in nearly three dozen categories, including transaction and purchase volume data, top 100 merchants by purchase volume and average ticket.
As for transaction fees, Sakhrani says Apple is getting 15 basis points per credit card transaction (lining up with previous reports) and half a penny for each debit transaction.
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Today, Nov 3. 2014 on News in Norway – Scandinavia is prepared and ready for Apple Pay too. Now we really getting somewhere… finally! Until now we still using the same cars, with just slightly different shapes since my childhood, still same Visacard or money bills and coins for decades now. Same furniture, clothes, everything around us has just experienced only a few changes – forth and back again to retro, every year.
Just a few devices from companies like Apple, with iPad and iPhone did give us the first steps into a new future.
In my childhood we saw SciFi movies with flying vehicles and amazing clothes in a far away 1999 or 2002 future… Non of this actually happen. We humans are pretty conservative, are perhaps only able to pollute our own planet and are still exited about retro furniture and old LP players and many are longing back to the past and Grandpa, and Grandma and are chasing shadows from the past. Understandable, but they looking in the wrong direction. They are meeting the future with their But first.
Others saw in the 70s /80s the Smart watches and Smart devices in the Movies and were exited and are still prepared, today more the ever, to a new and a better future… – if we really want. We can’t change our past anyway, we are more then able to create our future and new devices and new solutions can change our old habits, looking back and comparing every single pice with the past. Next stop – iWatch!
“USS Enterprise: Beam us up Scotty, now…!”
Can I have some of the drugs you are smoking????
I wonder what the per transaction cost of credit card fraud is today (likely much higher in the US than Europe due to current deployment of chip technology). 15bps sounds like a gold mine for Apple. Yet I suspect that it may be less than the credit card issuers are currently absorbing due to fraud. If so, Apple Pay will be a huge profit maker for the card issuers and for Apple — unless they agree to decrease the fees charged to merchants ;)
Good point – Also a lot of noise in US about competing products such as CurrentC. Sadly none of the articles mention that Apple’s plan are global and all the competing products are mostly US even Paypal wasted years within eBay and failed to become a global payment system and failed to fixed big holes in their security processes.
ApplePay is becoming popular because people (like yours truly) want the extra security and anonymity. It has nothing to do with not having to carry a wallet.
This really is the best case scenario for Apple, to be at the end of the transaction and let VISA/MC pay them their cut. If they were anywhere in the middle of the transaction, they might have additional cost or responsibility for fraud or compliance. They recognize the existing need for the “systems” the credit card companies and issuers have in place.