Apple Pay commission fee a massive hurdle for banks in Israel

AppleInsider

Apple has begun talks with banks and credit companies in Israel, hoping to bring Apple Pay to the country-- but Apple's commission fee may present a problem.

In November, Israeli businesses will begin using the EMV standard, allowing contactless NFC payment from tap-to-pay cards and mobile devices. Israel follows a large number of other countries that have moved into using the technology for payments, including many in Europe.

The shift has lead to Apple meeting with Israeli banks and credit unions in hopes of bringing Apple Pay to the country, Israel-based Calcalist learned in an exclusive.

However, Israeli financial institutions were not keen on Apple's commission fee, which falls somewhere between 0.15% and 0.25% of each transaction. This works out to roughly one quarter to one-third of the credit card issuer's revenue from the transaction, a hefty cut from an already relatively small fee.

"It is disproportionate, and constitutes an exploitation of its status and power," says a source familiar with the situation.

While this may slow down talks, it should not be seen as definitive in any way. In the past, Apple has reduced transaction fees to get into other markets, such as China, though in that case the potential size of the market gave Apple an incentive to reduce the charge.

Further causing consternation for financial institutions is that they need to negotiate with Apple to enable Apple Pay payments, or they will not be able to offer mobile payments to a large swathe of their customer base. Unlike Apple's control over access to NFC in the iPhone, Android devices provde more access to NFC for apps on a device, allowing the possibility of using a bank's own payment system.

Given efforts by legislators to try and force Apple to open up more access to NFC, the situation may change in the future.

This is not the first time Apple has faced resistance from Israel, though. In 2019, Apple abandoned plans for launching an Apple Store in Israel, after no mall owner in the country had been willing to accept Apple conditions for opening a store.

SpamSandwich

“You’re not charging us enough!”... said no one ever.

LeoMC

The banks in my country are asking 1% for every POS transaction...
For ePOS and business cards they charge over 2.5%.
Isn't that also "disproportionate, and [doesn't] constitutes an exploitation of [the banks] status and power"?

lkrupp

Apple’s brand is very valuable. That they monetize it is perfectly legitimate. If malls and banks don’t want to pay the commission that’s their decision. It’s all business. Forcing Apple to lower its commissions or allow other NFC payments systems on the platform cheapens the brand. There are a myriad of options for banks and malls. The bottom line is they WANT the Apple brand swagger , and they are under pressure from their customers to have it, but  they aren’t willing to pay for it so they petition government to force it. The Apple ecosystem is not a monopoly in any sense of the word.  The fact that it contains 1.5 billion customers is what others want but, AGAIN, they are unwilling to pay for it. Cry me crocodile tears.

sflocal

"It is disproportionate, and constitutes an exploitation of its status and power," says a source familiar with the situation.

Sounds like Australia's banks are also in Isreal.

I always make an effort to use businesses that accept ApplePay.  I feel much better knowing my credit card won't be skimmed by anyone.

22july2013

Since Face ID and Touch ID are both more secure than a PIN, banks have less fraud to worry about, and thus should be willing and eager to pay more for that technology and still make the same amount of money.

mac_dog

Is there a reason the “likes” have disappeared? Jesus, I hope you guys aren’t censoring that aspect of the comments section. 

mac_dog

sflocal said:

"It is disproportionate, and constitutes an exploitation of its status and power," says a source familiar with the situation.

Sounds like Australia's banks are also in Isreal.

I always make an effort to use businesses that accept ApplePay.  I feel much better knowing my credit card won't be skimmed by anyone.

It’s not just the potential credit card theft, but one of the main reasons big business doesn’t like Apple Pay is that the specifics of the transaction—what you actually purchase—remains hidden. Only the store in which you made a purchase is available information. Marketers HATE this! It’s why there is so much resistance to the platform. I guess they prefer weaker security over sales information. Note to businesses: not everyone wants to be a commodity. 

tjwolf

"This works out to roughly one quarter to one-third of the credit card issuer's revenue from the transaction" - is this actually true?  If so, it's a lot different from the US.  In the US, the issuing bank gets approximately 1.75% of  about a 2% fee the merchant pays for accepting the credit card (https://en.wikipedia.org/wiki/Interchange_fee).  So 0.15% is nowhere near a quarter to one-third of the revenue from the transaction - more like 8.5%-14%.

entropys

The banks are grumpy because they not have to pay even anything for something they can’t control and worse, reduces the degree they can monetise their very own customers. They will cave eventually. Australian banks did.

gcv

Perhaps if the banks used Pegasus spyware sold by the Israeli firm NSO, they could tap into Tim Cook’s phone and learn about Apple’s negotiating tactics. After all, that is the method the Saudis used to track journalist Kushogi when it had him murdered, and the same the Saudis used to hack Jeff Bezos’ phone because the Saudi prince didn’t like the news coverage from the Washington Post, and the same spy software the Mexican government used on the phones of journalists who reported on government corruption.

Just sayin’.

silvergold84

Apple Pay offer quality and its safe. People love Apple products and the Apple stores receive more visits that any other stores all over the world. Android offer free nfc but no one of their services have that high appreciation like Apple Pay have. So I have iPhone and I like to have Apple Pay , a safe service that work properly everytime and that respect my privacy. 

silvergold84

lkrupp said:

Apple’s brand is very valuable. That they monetize it is perfectly legitimate. If malls and banks don’t want to pay the commission that’s their decision. It’s all business. Forcing Apple to lower its commissions or allow other NFC payments systems on the platform cheapens the brand. There are a myriad of options for banks and malls. The bottom line is they WANT the Apple brand swagger , and they are under pressure from their customers to have it, but  they aren’t willing to pay for it so they petition government to force it. The Apple ecosystem is not a monopoly in any sense of the word.  The fact that it contains 1.5 billion customers is what others want but, AGAIN, they are unwilling to pay for it. Cry me crocodile tears.

thats true: their customers want Apple Pay but the banks want take all the money without pay what is right for the service . 

cropr

22july2013 said:

Since Face ID and Touch ID are both more secure than a PIN, banks have less fraud to worry about, and thus should be willing and eager to pay more for that technology and still make the same amount of money.

Most security specialist don't agree with you.   Once compromised, any biological authentication means remains comprised forever.   If a copy of your fingerprints has leaked, it can be reused forever. You cannot change your fingerprints (unless you torture yourself) but you can change your compromised PIN

I have been working as a freelance fraud professional at a bank who accepts Apple Pay, and the number of fraud cases with Apple Pay is disproportionately high.   A lot of Apple users are too confident in Apple Pay, becoming less prudent and more susceptible to phishing attacks.

sflocal

mac_dog said:

sflocal said:

"It is disproportionate, and constitutes an exploitation of its status and power," says a source familiar with the situation.

Sounds like Australia's banks are also in Isreal.

I always make an effort to use businesses that accept ApplePay.  I feel much better knowing my credit card won't be skimmed by anyone.

It’s not just the potential credit card theft, but one of the main reasons big business doesn’t like Apple Pay is that the specifics of the transaction—what you actually purchase—remains hidden. Only the store in which you made a purchase is available information. Marketers HATE this! It’s why there is so much resistance to the platform. I guess they prefer weaker security over sales information. Note to businesses: not everyone wants to be a commodity. 

Exactly.  One would think the banks would embrace Apple Pay as the chances for fraud are so much lower, hence saving them money.

Their resistance shows that even with the savings due to fraud, they make more money in the selling of one’s private info that they would accept fraud and inconveniencing their customers.

Mike Wuerthele

mac_dog said:

Is there a reason the “likes” have disappeared? Jesus, I hope you guys aren’t censoring that aspect of the comments section. 

Two other threads address this in the feedback section. It is temporary, related to back-end work, and they will return.

I also fail to see how them being gone would be "censorship," but whatever, I guess.

Edit. BEHOLD. They have returned.

GeorgeBMac

Mike Wuerthele said:

mac_dog said:

Is there a reason the “likes” have disappeared? Jesus, I hope you guys aren’t censoring that aspect of the comments section. 

Two other threads address this in the feedback section. It is temporary, related to back-end work, and they will return.

I also fail to see how them being gone would be "censorship," but whatever, I guess.

Edit. BEHOLD. They have returned.

Just ask Mike.   Mike can do anything!   Make Likes appear like wine from water!