Apple Pay, the tech company's first venture into mobile payment, hasn't been able to make significant advances since it was launched in September last year. The service enables its users to make contactless purchases using an iPhone or an Apple Watch in supported merchants, but with the support of credit card companies like Visa, MasterCard and American Express.
Take off in the U.S. seems to be quite slow, while it encountered a number of difficulties after it was introduced in the U.K. Just recently, the possibility of a standoff with major Australian banks has also been reported.
The Sydney Morning Herald disclosed that the company is negotiating with at least four of the biggest banks there for a partnership with Apple Pay. This is because the online payment platform needs to make a deal with the bank that issues the credit card which supports its system.
Information gathered reveals that the issues involved in the negotiation mainly deal with the fees that Apple Pay intends to collect from their partners.
Apple collects 15 cents for every $100 spent through an Apple Pay transaction in the United States. This rate is about half of what the bank is supposed to have per transaction in Australia, such that the 0.15 percent cut that Apple intends to have is a difficult one to accept.
Moreover, the major banks are said to be reluctant in opening their payments infrastructure to Apple for the following reasons:
1. As the banks are forced by the Reserve Bank of Australia (RBA) to tip hundreds of millions of dollars to the New Payments Platform, a new infrastructure foreseen to have real-time capacity. Concerns have also been raised on Apple aiming for a free ride on the investment.
2. Challenges are facing the negotiations as the banks see the prospect of Apple getting in between them and their customer at the point of sale, with the recognition that revenue growth will come from being the "interface" or upon customer's payment of goods and services, allowing them, in turn, to cross-sell products.
Apple Pay was first introduced in the U.S. last October, and then in July this year in the United Kingdom. It is said that Apple Pay will be brought to Canada this Fall, then to China by next year.
