Wednesday, Oct 06, 2021, 16:13 Economy

Visa and Banks Rebel Against Apple Pay - But Apple Has an Ace up its Sleeve

Those who decide to pay via Apple Pay, which is convenient and also very secure in terms of data protection, always make a small indirect payment to Apple. Just as credit card providers take a small percentage, a constant flow of money also flows in the direction of Cupertino. There are no official figures, but it is estimated that Apple receives about 0.15 percent of sales. That may not sound like much, but it adds up. In the U.S. alone, for example, customers made card transactions worth $156 billion in 2020.

Banks protest, Visa has a solution.
However, discontent is now spreading among banks regarding the fees charged by Apple - and Visa is launching a new implementation that would leave Apple partially empty-handed. In recent months, Visa already informed about the planned system, which always uses different tokens for recurring payments. In the case of a monthly subscription, this means that Apple will only receive fees on the first payment, but not thereafter.

However, Apple has an effective means of pressure.
At the same time, according to the Wall Street Journal, Apple and Visa are "in talks." It is therefore difficult to assess at this stage whether this will come to fruition. Apple has a trump card up its sleeve, which already came to a head years ago during the initial negotiations. At that time, Apple refrained from entering the banking business itself - in return, Visa and MasterCard promised rapid implementation. The waiver of a competing payment network was so important to the card operators that they made another concession. While normally the requirement for partners is to support all cards issued as Visa or MasterCard, Apple was given the right to decide independently.


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Currently, there is no Apple payment network - yet.
When Apple came up with the Apple Card two years ago, it already caused displeasure in the banking industry, although Apple had stuck to the former deal. The Apple Card is a MasterCard issued by Goldman Sachs and is not based on Apple's own network. If, on the other hand, efforts are pushed to deprive Apple of Apple Pay fees, the market situation is likely to change. Apple would then be free to position the Apple Card as the preferred payment system for all Apple customers - on its own terms and in competition with the previous top dogs.

Apple Pay enjoys high reputation
Apple puts forward yet another argument as to why banks should be keen to support and promote Apple Pay. The secure and simple method of payment is highly valued by customers - and banks can also advertise precisely these advantages. It therefore seems unlikely that there will be a rebellion against Apple and that many partners will go on the offensive against Apple Pay or the fee system.

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