Apple Negotiates Lower Transaction Fees With Credit Card Issuers for Mobile Payments Initiative

in_app_purchase_iconAs 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.

Related Roundup: Apple Pay

Top Rated Comments

(View all)
Avatar
73 months ago
You see, like the tablet, Apple is doing what it does best. Instead of inventing the tablet, it revolutionised the tablet industry and made people want one.

With NFC, Apple may not be the first to use it, however, they're likely to change the way people use it- enhancing it, for the better.
Score: 19 Votes (Like | Disagree)
Avatar
73 months ago
This is very exciting :D If apple does it right, paying with smartphones may become the norm.
Score: 7 Votes (Like | Disagree)
Avatar
73 months ago
That iPhone OS 3.0 In-App Purchase Icon...
Score: 5 Votes (Like | Disagree)
Avatar
73 months ago
And once again Apple defines what "an ecosystem" is to all the naysayers.
Score: 4 Votes (Like | Disagree)
Avatar
73 months ago

You see, like the tablet, Apple is doing what it does best. Instead of inventing the tablet, it revolutionised the tablet industry and made people want one.

With NFC, Apple may not be the first to use it, however, they're likely to change the way people use it- enhancing it, for the better.


Thanks captain obvious
Score: 4 Votes (Like | Disagree)
Avatar
73 months ago
If this is true I think it confirms Touch ID is coming... The card not present additional fee is used for the banks to recoup losses because of the increased chance of fraud and therefor loss for the bank. I'd think the only way the banks would agree is if there was an increased security to ensure fraud isn't possible.

Matter of fact, if this is the case it would make my credit card more secure than using the actual credit card. iPhone/iWatch + fingerprint security > credit card with a signature
Score: 4 Votes (Like | Disagree)

Top Stories

Apple Acquires Weather App Dark Sky

Tuesday March 31, 2020 10:22 am PDT by Juli Clover
Apple has acquired weather app Dark Sky, Dark Sky's developers announced today. Dark Sky is one of the most popular weather apps on the App Store, known for its accuracy and storm warnings. Our goal has always been to provide the world with the best weather information possible, to help as many people as we can stay dry and safe, and to do so in a way that respects your privacy. There is no ...

Apple's 2020 MacBook Air vs. 2020 iPad Pro

Wednesday April 1, 2020 2:45 pm PDT by Juli Clover
Apple in March updated both the MacBook Air and the iPad Pro, and with the iPad Pro increasingly positioned as a computer replacement, we thought we'd compare both new machines to see how they measure up and which one might be a better buy depending on user needs. Subscribe to the MacRumors YouTube channel for more videos. We're comparing the base model 12.9-inch iPad Pro and the base model...

Zoom Accused of Misleading Users With 'End-to-End Encryption' Claims Amid Other Security Issues [Updated]

Wednesday April 1, 2020 2:47 am PDT by Tim Hardwick
Zoom is facing fresh scrutiny today following a report that the videoconferencing app's encryption claims are misleading. Zoom states on its website and in its security white paper that the app supports end-to-end encryption, a term that refers to a way of protecting user content so that the company has no access to it whatsoever. However, an investigation by The Intercept reveals that...

Case for Upcoming Low-Cost iPhone Shows Up at Best Buy With Alleged April 5 Stock Date

Monday March 30, 2020 4:25 pm PDT by Juli Clover
Apple has a new low-cost iPhone in the works, which is supposed to be launching sometime in the first half of 2020. Given the ongoing situation in the United States and other countries, it's been unclear if the device is going to launch within the planned timeline, but there are signs that it could be coming soon. We started seeing cases for the new low-cost iPhone back in early February,...

Apple Adding Some 2013 and 2014 MacBook Air and MacBook Pro Models to Vintage Products List at End of April

Wednesday April 1, 2020 2:24 pm PDT by Joe Rossignol
In an internal memo obtained by MacRumors, Apple has indicated that the following 2013 and 2014 models of the MacBook Air and MacBook Pro will be added to its vintage and obsolete products list on April 30:MacBook Air (11-inch, Mid 2013) MacBook Air (13-inch, Mid 2013) MacBook Air (11-inch, Early 2014) MacBook Air (13-inch, Early 2014) MacBook Pro (13-inch, Mid 2014)Apple defines vintage...

AirTags Referenced in New Apple Support Video

Thursday April 2, 2020 12:12 pm PDT by Joe Rossignol
Apple has accidentally referenced its widely rumored AirTags item tracking tags in a video that it uploaded to its Apple Support channel on YouTube today. The video was first spotted by the blog Appleosophy and has quickly been removed. The video was titled "How to erase your iPhone." AirTags were mentioned in Settings > Apple ID > Find My > Find My iPhone under Enable Offline Finding, with...

Testing Brydge's New Pro+ Keyboard With Trackpad for iPad Pro

Monday March 30, 2020 2:04 pm PDT by Juli Clover
Well ahead of when Apple introduced trackpad support in iOS 13.4, Brydge announced an iPad Pro keyboard with a built-in multi-touch trackpad. We have one of Brydge's new Pro+ keyboards on hand, and thought we'd check it out to see how it works with Apple's new 2020 iPad Pro models. Subscribe to the MacRumors YouTube channel for more videos. The Brydge Pro+ keyboard is similar in design to...

Intel Unveils 10th-Gen Processors Suitable for Next 16-Inch MacBook Pro With Wi-Fi 6 and Turbo Boost Speeds Above 5GHz

Thursday April 2, 2020 7:53 am PDT by Joe Rossignol
Intel today announced the launch of its latest 10th-generation Core processors for high-end notebooks, potentially including the next 16-inch MacBook Pro. The batch of 45W chips, part of the Comet Lake family, are built on Intel's 14nm++ architecture. The new H-series chips have the same base clock speeds as the 9th-generation chips in the current 16-inch MacBook Pro, but Turbo Boost speeds...

Apple's Work on New Upcoming Products Progressing Normally as Employees Adjust to Telecommuting

Monday March 30, 2020 11:58 am PDT by Juli Clover
Apple's development of upcoming products is progressing as usual despite the fact that Apple employees around the world are working from home, according to a new report today out from Bloomberg. Apple is still working on new versions of the HomePod, Apple TV, MacBook Pro, budget iPads, Apple Watch, iPhone, and iMac, all of which could be released "as early as later this year" and have been...

2020 iPad Pro May Not Have a U1 Ultra Wideband Chip After All

Wednesday April 1, 2020 8:49 pm PDT by Joe Rossignol
While it was previously reported that all 2020 iPad Pro models feature the same Apple-designed U1 chip as the iPhone 11 lineup, enabling Ultra Wideband support, we have compiled evidence to suggest that this may not be the case. As a reminder, Apple's tech specs for the iPhone 11 and iPhone 11 Pro list an Ultra Wideband chip for spatial awareness, but the chip is not mentioned in Apple's...