Apple to reportedly net 15 cents for every $100 Apple Pay transaction
Details of Apple's upcoming Apple Pay mobile payments system are starting to emerge, with a report on Friday claiming the company will garner 15 cents on a $100 purchase, more than Google managed for its Google Wallet initiative.
According to sources familiar with Apple's banking and credit card arrangements, Cupertino will get a 0.15 percent cut of every Apple Pay transaction conducted over NFC, the Financial Times reports.
The new information adds to a previous report that noted Apple will collect fees from banks for customer purchases. What those fees were, exactly, was unknown at the time.
In an in-depth overview of Apple Pay published yesterday, it was reported that Apple's banking and credit card network partners are willing to offer lower per-transaction fees thanks in large part to the technology's integration. For example, despite being a "no card present" touch-less solution, Apple Pay will be charged at rates below even "card present" tiers, a major discount competing wireless payment makers were unable to secure.
Part of the reasoning behind the move is that Apple's system does not infringe on traditional credit card payments networks, unlike some other programs backed by major retailers. In lieu of higher transaction fees, banks are supposedly looking to make up the difference through sheer volume driven by -- hopefully rapid -- Apple Pay adoption. Instead of paying with cash, consumers may switch to Apple's system.
Further, Apple's payments solution is tokenized, meaning card numbers and other sensitive information is replaced with generated codes. The system is thought to be more secure than swip-to-pay methods.
Apple Pay will be available on iPhone 6 and iPhone 6 Plus handsets, as well as the upcoming Apple Watch.
According to sources familiar with Apple's banking and credit card arrangements, Cupertino will get a 0.15 percent cut of every Apple Pay transaction conducted over NFC, the Financial Times reports.
The new information adds to a previous report that noted Apple will collect fees from banks for customer purchases. What those fees were, exactly, was unknown at the time.
In an in-depth overview of Apple Pay published yesterday, it was reported that Apple's banking and credit card network partners are willing to offer lower per-transaction fees thanks in large part to the technology's integration. For example, despite being a "no card present" touch-less solution, Apple Pay will be charged at rates below even "card present" tiers, a major discount competing wireless payment makers were unable to secure.
Part of the reasoning behind the move is that Apple's system does not infringe on traditional credit card payments networks, unlike some other programs backed by major retailers. In lieu of higher transaction fees, banks are supposedly looking to make up the difference through sheer volume driven by -- hopefully rapid -- Apple Pay adoption. Instead of paying with cash, consumers may switch to Apple's system.
Further, Apple's payments solution is tokenized, meaning card numbers and other sensitive information is replaced with generated codes. The system is thought to be more secure than swip-to-pay methods.
Apple Pay will be available on iPhone 6 and iPhone 6 Plus handsets, as well as the upcoming Apple Watch.
Comments
ApplePay is inherently more secure than using a physical card. Here's why. Credit card number/information is not stored anywhere on your iPhone. Not. Stored. Anywhere. When you take a picture of one of your credit cards, the information on it is used to communicate with your card provider, which then issues a token representing that card. The token is sent back to your iPhone. The token is what is stored in the secure element on the iPhone along with just the generic type of card it is associated with (VISA, MasterCard, whatever) and the credit information and image of your actual credit card are then deleted.
None of your sensitive credit card information is stored on your iPhone.
When you use ApplePay, the tokens in your iPhone are accessed to present a list of the cards you have available to pay with. Just generic images of each card. You pick one, or, if you've established a default and that's the one you intend to pay with, you can skip that step. You hold your phone near the NFC reader and touch the Touch ID on the phone. The phone generates a one-time use payment token from the token representing your selected credit card. This one-time use payment token, using Public Key encryption technology, can be decrypted only by the credit card issuer, which holds the private key used to decrypt it. Presumably, the public key token incorporates the exact amount of the charge and the business being credited with the charge. That way, even if this token is intercepted, it cannot be used twice and can be used by a thief only to charge the purchase you are standing at the register and in physical possession of. No way for a thief to gain from the use of the intercepted information.
None of your sensitive credit card information is transmitted during a transaction.
After the charge has been approved by the card issuer/bank, a confirmation of such is sent back to the business so that you are allowed to complete your transaction at the register, receive a receipt and leave the business with your goods/services. The business retains only a record of which type of card was used to complete the transaction, not even your name or card number, etc. If the business' systems are later compromised, such as what occurred with Home Depot, Target, others, card information may be stolen associated with those who swiped their physical credit cards at the same registers you and other ApplePay users used, but your card information and that of those other ApplePay users will not be stolen because it will simply never have existed in the business' systems.
None of your sensitive credit card information is stored by any business you purchase from.
So ApplePay is inherently more secure. Your credit card information is not stored in the dozens, or hundreds, of businesses you've made purchases from. Can thieves still get hold of your credit card information? Of course, either by stealing the actual card from you or by breaking into your card issuer's systems. These methods have existed and will still exist, but gone will be the days of restaurant staff lifting an imprint or, in the modern era, snapping a pic of your card with their smartphone. Gone are the days of your information being compromised due to a break in of the systems of a store at which you made one or more purchases. Gone are the days of your information being lifted by scanners secretly inserted into gas pumps, etc.
Perfectly secure? Never. Inherently more secure in several fundamental ways? Absolutely.
Well that certainly sounds much better than zero point one five percent
Further, Apple's payments solution is tokenized, meaning card numbers and other sensitive information is replaced with generated codes. The system is thought to be more secure than swip-to-pay methods.
Because, really, anything would have to be more secure than how retailers like Target and Home Depot store our credit card data, right?
15 cents. Isn't it less? Can someone please tell me, how much other (intermediary) companies take?
They should GIVE their solutions to the banks to profit from, asking nothing in return. Won't someone think of the bankers!
For the consumer, using the phone to pay with fingerprint authentication could be a lot easier than entering a pin and makes the transaction more secure, no more cameras in the room capturing your pin number.
The problem is at the merchant who will have to implement the NFC readers. This is already in place in some large chains and at various large utilities like transportation. For small merchants it will take a while.
Overall NFC will work have to work in parallel with Chip & Pin for some time, but it could be successful.
One problem with NFC is that its usually pin-less. So it can only be used for small transactions, e.g. with Paywave cards. With NFC in a phone with fingerprint recognition, then for small transactions the phone might act in a pin less mode, but with higher value transactions the phone could ask for fingerprint authentication, thus opening up NFC for higher value transactions but keeping low friction.
Considering that the POS system used by Home Depot and Target is designed for Windows Embedded you are quite correct.
BTW, there is nothing inherently wrong with Windows Embedded. The issue is that most vendors who use Windows Embedded don't manage Windows Embedded devices as an operating system with all the disadvantages thereof.
It depends on the company. Banks charge a per swipe fee typically for businesses depending on how their merchant services are setup.
It's why if you've ever gone somewhere and they have a "minimum" purchase amount to swipe it's because those fees could range up to .40 per swipe.
It's why banks are more than willing to give debit cards to consumers, more swipes = tons of revenue.
So...how is this going to work in the world outside the USA where chip & PIN is commonplace?
We don't know yet but if the terminals have NFC hardware then it should be easy. It would just require software changes to the merchant and bank systems.
If those terminals do not support NFC then that would be a problem. But what I hear from friends outside the U.S. is that NFC is common.
However, I expect that Apple will take a while to roll this out to other countries. One reason is because there are agreements that must be negotiated. A second reason is to give the U.S. rollout time to show any problems, and fix them before going to other countries.
One problem with NFC is that its usually pin-less. So it can only be used for small transactions, e.g. with Paywave cards. With NFC in a phone with fingerprint recognition, then for small transactions the phone might act in a pin less mode, but with higher value transactions the phone could ask for fingerprint authentication, thus opening up NFC for higher value transactions but keeping low friction.
The current NFC usage is PIN-less and therefore has low limits. As far as we know, ApplePay is ALWAYS authenticated so I do not expect that the "pay wave" limits will be in effect. I can't believe that Apple would ever agree to such a limitation given the security in ApplePay.
Sounds like the worst diagnosis imaginable.
“You have stage 2 pancreatic cancer.”
“Oh, thank heavens. At least it wasn’t windows embedded.”
“Oh, yes; we’d’ve had to send you to the national diagnostic center for that.”
Credit card customers who earn cash back or points and pif may be the biggest losers here.
Credit card customers who earn cash back or points and pif may be the biggest losers here.
Shouldn't affect anything. Of course, we are not sure yet which cards any of these issuing bank, which signed on, are restricted from Apple Pay. But, my guess is this $$ goes hand in hand with the lower transaction fee that Apple negotiated. Thus, the .15% is taken off the normal, card present fee.
It makes zero sense that Apple negotiated lower transaction fee to take these cards as a separate item. Why, because Apple is not a payment processor. Processors are the ones that set the rates the merchants pay.
FYI, It is the merchant who pays for all of those points you get. It's included in the higher fixed rate or pass through rates (if the processor charges passthrough interchange + fee) The interchange is based on the specific cad type (rewards, corporate, corp rewards, etc).