Apple Pay launches in Israel

in General Discussion
Following protracted negotiations over Apple's cut of Apple Pay transactions in the region, the service has now launched in Israel.

Apple Pay
Apple Pay

Eight years after its initial launch in the US, and after contentious disagreements over Apple's transaction cut, Apple Pay has now finally launched in Israel. It has yet to be launched by all banks in the country, but ones including mobile banking service Pepper have been preparing for it.

According to Israeli publication The Verifier, the service has officially begun rolling out, and is expected to reach all banks.

"The launch means that customers of all banks and credit card companies in Israel will now be able to add the credit card or direct debit card to the service," says The Verifier, in translation.

As well as negotiations over the per-transaction fee charged by Apple, Israel has also been updating its technology. In November 2020, businesses in the country began using the NFC contactless EMV standard, which enabled payment from tap-to-pay cards, and mobile devices.

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  • Reply 1 of 2
    22july201322july2013 Posts: 3,573member
    Apple Pay (I'm not talking about Apple Card, rather I'm talking about Apple Pay when you configure it with some other credit card) gets $0.0015 per dollar from each credit card transaction from the banks in Canada and the US. The amount may differ in other countries, but I've been unable to find a list of the amounts in any other countries. 

    Apple Pay (again, not Apple Card) seems to be a hit. It already accounts for 5% of global credit card transactions, and that is expected to reach 10% by 2025 according to some banking pundits online.

    The banking institution itself takes a couple of pennies per dollar per credit card transaction, including Apple Pay transactions. Apple's cut is about one tenth of the bank's cut. Banks worry about every percent, so I can see why they don't like Apple taking anything. But Apple is doing a service, including have the iPhone validate the user with biometrics, and obviously that deserves something, since biometrics is more secure than a PIN, and saves the banks money when it comes to fighting fraud. Apple is not a monopoly in the phone payment system, and banks are free to do business only with Google Pay if they don't like Apple Pay's fees. But Apple's biometrics should be a strong plus for the banks. (I don't think banks "get technology" because the purchase limit on Tap-to-Pay is actually much lower for biometric devices than it is for PINs here in Canada. It should be the exact opposite. I think banks are clueless, which is why I'm hoping to switch my card to Apple Card when it arrives in Canada: to punish the banks for being luddites.)

    Another important factor is that credit cards come in two or three levels. I'll explain why this is important in the following paragraph. The first level is the basic card, which in my country tends to charge merchants about 1.7 cents per dollar on transaction fees (Visa is slightly lower, but I want to simplify the numbers so I'm averaging Visa and Mastercard.) Then there is the elite card which is given only to higher-spending customers, who spend more, and the charge to merchants in that case is, on average, 2.3 cents (about 35% more than the basic card.) A merchant must accept both kinds of cards, or the card company won't let them accept any of their cards. You can see why some companies don't like to accept credit cards. Some retailers don't accept any credit cards because they don't like these fees. But that's their loss, because I recall studies that show that people with credit cards buy 20% more stuff than people who pay with cash.

    I've read that the Apple Card is designated (by Mastercard, it's backer) as an elite card, which means they get to charge the higher amount (eg, 2.3 cents), and any merchant who accepts Mastercard must accept the Apple Card (Currently Apple Card is available in the US only.) The idea is that people who own iPhones are bigger spenders (sounds true enough) and therefore the higher fee to merchants is justifiable. (I'm not sure I follow that logic, but Visa does the same thing.)

    In my opinion the best way for banks to fight the fees is to fight to be the brand that carries the Apple Card (not Apple Pay) in their country. The only country Apple Card is available in is the US. Tim Cook has said he wants to expand it to other countries, but he's not legally bound to choose Goldman Sachs in any other country. If a bank can win Apple's business, even if they pay Apple the same or higher rate, they will gain more customers which is an overall win for any bank that backs the Apple Card. Banks shouldn't be afraid of Apple, they should be courting Apple. Or maybe banks, who, when combined, are far richer than Apple, should create a Joint Venture to build their own smart phone. Then they can keep that 0.0015 cents per dollar. Do they really want to spend a few billion in R&D to save 0.0015 cents per dollar? I believe they could succeed. It wouldn't even have to be a phone, it could be a smart belt buckle or something else that we all carry.

    It's also worth noting that MasterCard's stock value has gone up 40% since the date Apple Card was released (Aug 2019) using its brand, while Visa has gone up 30%. I have no real way of knowing wether the Apple Card has anything to do with Mastercard's better performance than Visa, but it may be a factor. I think the Apple Card is a waking lion and Mastercard (and Goldman Sachs) is going to ride that lion as it wakes up. P.S. Goldman Sachs' stock has gone up by 80% during this time.
    edited May 2021 watto_cobra
  • Reply 2 of 2
    guiguihipguiguihip Posts: 29member
    Apple Pay launched 6 years and a half ago (fall of 2014), not 8 years ago.
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