Apple Pay will definitely make paying for merchandise and services much easier at participating merchants, but what does Apple get out of the deal? We mean besides the 0.15% of each transaction we already know about.
Sanjay Sakhrani of Keefe, Bruyette & Woods was able to get a look at an Apple Pay contract, and in a note published on Friday, Sakhrani stated that Apple Pay terms and conditions were “in-line” with expectations, but he also highlighted several notable points:
- Apple will receive 15 basis points per credit card transaction and half a penny per debit transaction.
- On behalf of Apple, the networks will collect the portion of interchange owed to the company from the issues and will only then pass along the fees to Apple.
- Issuers must allow at least 95 percent of the cards in their portfolio to participate in Apple Pay, which may not necessarily include gift cards or ATM-only cards.
- Apple has the ability to request up to two times a year that the amounts the issuers pay are accurate. Apple reserves the rights to seek advice from independent auditors to verify accuracy.
- Issuers must supply Apple with various data statistics in nearly three dozen categories, including transaction and purchase volume data, top 100 merchants by purchase volume and average ticket.
While we knew about the 0.15% per transaction fee, the half a penny per debit transaction is news.
Card issuers must allow 95% of their portfolio to participate in Apple Pay, that’s anything with a credit card company logo on it, excepting gift cards or ATM-only cash cards.
Up to twice yearly audits on the amounts issuers pay to Apple will likely keep them on the straight and narrow, and the data Apple requires to be reported will also give them a good idea what consumers are paying for via their device’s Apple Pay capabilities.
