Apple Negotiates Lower Transaction Fees With Credit Card Issuers for Mobile Payments Initiative
As part of its upcoming payments initiative, Apple has reportedly negotiated deals for lower credit card transaction fees with several credit card issuers. According to Bank Innovation, Apple has entered into agreements with American Express, JP Morgan Chase, Citigroup, Capital One, and Bank of America.
The banks have agreed to allow all of Apple's transactions to be conducted as "card present," a set fee charged when a customer uses a card in a physical retail location. Typically, there's also a higher "card not present" fee that's charged when a card is used online, due to security issues. Apple's also managed to secure a lower "card present" fee on top of that, cutting its costs further.
Beyond that, Apple has also managed to bump down the actual "card present" rate by 15 to 25 basis points, according to people with knowledge of the talks. Normal "card present" discount rates, which are shared by issuers and networks but determined by the network, are about 1.5%, which means that Apple appears as though it will get around a 10% discount on the processing rate it will pay. Last quarter, Apple generated $4.5 billion of iTunes revenue -- this implies that Apple will save at least $27 million as a result of these deals with the banks. Of course, more revenue volume is expected upon launch of Apple's payments venture.
Apple has reportedly been able to negotiate this lower rate by ensuring banks that transactions will be secure, both through the use of the NFC chip which reports location, and through Touch ID, which will be used to authenticate transactions.
In addition to signing deals with several financial institutions, Apple has also managed to secure deals with major credit card companies Visa, MasterCard, and American Express, and it's also been speaking with various retailers about its upcoming payments service.
Rumors have suggested that Apple's payment service will allow iPhone owners to use their devices to make payments both online and in retail stores, possibly linking credit cards to existing iTunes accounts. Apple is expected to announce its mobile payments initiative during its September 9 media event.
Popular Stories
Following nearly two years of rumors about a fourth-generation iPhone SE, The Information today reported that Apple suppliers are finally planning to begin ramping up mass production of the device in October of this year. If accurate, that timeframe would mean that the next iPhone SE would not be announced alongside the iPhone 16 series in September, as expected. Instead, the report...
Key details about the overall specifications of the iPhone 17 lineup have been shared by the leaker known as "Ice Universe," clarifying several important aspects of next year's devices. Reports in recent months have converged in agreement that Apple will discontinue the "Plus" iPhone model in 2025 while introducing an all-new iPhone 17 "Slim" model as an even more high-end option sitting...
Apple supply chain analyst Ming-Chi Kuo today shared alleged specifications for a new ultra-thin iPhone 17 model rumored to launch next year. Kuo expects the device to be equipped with a 6.6-inch display with a current-size Dynamic Island, a standard A19 chip rather than an A19 Pro chip, a single rear camera, and an Apple-designed 5G chip. He also expects the device to have a...
Apple typically releases its new iPhone series around mid-September, which means we are about two months out from the launch of the iPhone 16. Like the iPhone 15 series, this year's lineup is expected to stick with four models – iPhone 16, iPhone 16 Plus, iPhone 16 Pro, and iPhone 16 Pro Max – although there are plenty of design differences and new features to take into account. To bring ...
Apple’s iCloud Private Relay service is down for some users, according to Apple’s System Status page. Apple says that the iCloud Private Relay service may be slow or unavailable. The outage started at 2:34 p.m. Eastern Time, but it does not appear to be affecting all iCloud users. Some impacted users are unable to browse the web without turning iCloud Private Relay off, while others are...
Apple is planning to release at least one iPhone 17 model next year with mechanical aperture, according to a report published today by The Information. The mechanical system would allow users to adjust the size of the iPhone 17's aperture, which refers to the opening of the camera lens through which light enters. All existing iPhone camera lenses have fixed apertures, but some Android...