A new report in the Wall Street Journal is highlighting growing frustration from many banks towards Apple Pay. The mobile wallet platform, which enjoys widespread popularity and significant market share, earns Apple a transaction fee on every purchase – giving the tech giant significant revenue, despite a potentially reneging on a 2014 pledge not to compete with other cards with the Apple Card.
Banks Pressuring Visa on Apple Pay Fees
Apple received several concessions from credit card issuers and payment networks when it first launched its Apple Pay platform in 2014. Chief among these concessions was an agreement by banks to pay Apple 0.15% of each purchase made with their cards through Apple Pay. In exchange, Apple agreed not to launch a credit card network, a la Visa or Mastercard.
The launch of the Apple Card, however, has caused significant headaches for many banks. These card issuers now view Apple as a direct competitor, meaning Apple has a distinct advantage in the market, particularly as Apple enjoys the benefits of getting paid for purchases made with non-Apple Cards while receiving the additional proceeds from Apple Card itself.
Visa Considering a Change to Charges On Apple Pay
The Wall Street Journal is now reporting that many banks are lobbying Visa to change how Visa issues tokens for Apple Pay cards. These new changes, the banks argue, would make the Apple Pay platform (and the fees it charges) a more equal playing ground.
According to the report, Visa is considering changes to see Apple receive a transaction fee on an initial subscription payment and not on subsequent transactions. Reducing the fees banks pay to a one-off payment would level the playing field and reduce Apple’s financial advantage. Currently, Apple Pay makes the majority of its revenue from the 0.15% transaction fee.
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