There is also a concern that signing on with Apple Pay gives away too much control of the relationship with the customer; by putting their cards behind Apple, banks worry that they are losing opportunities to expand sales and conversion opportunities. In the U.S., Apple reportedly earns around 15¢ for every $100 of transactions, while transaction fees come to about $1 per $100.
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But fast forward to today and Apple Pay is nowhere to be seen, despite our advanced payments infrastructure.
The crux of the issue between Apple and Australia’s major banks is $2 billion in interchange fees that the banks make every year.
“By most global standards, the capability that the Australian banking sector has generally, and Commonwealth Bank has specifically, to provide for customers is ahead of a lot of the other markets around the world where Apple has done well”, Mr Narev said last week after delivering the bank’s full-year cash profit of $9.14 billion. If this problem continues, Apple may have trouble establishing an effective foothold in the Australian market, where consumers are becoming very interested in mobile payments.
Apple is having some difficulty rolling out its mobile payment system globally as Australian banks are reportedly holding off support. Narev says that his bank – and many others in Australia – implemented the underlying technology for Apple Pay between 18 months and two years ago.
Nearly ten months after Apple Pay launched in the United States, an increasing number of retailers including Rite Aid and Best Buy have reversed course and announced support for the mobile payments service.
Firstly, the Reserve Bank of Australia is forcing banks to contribute to the cost of building a real-time payments infrastructure and the banks reportedly don’t want Apple to take advantage of this investment without contributing to the project. “If it is not Apple, it might be Google; if it is not Google, it might be Samsung; if it is not Samsung, it might be Amazon; if it is not Amazon, it is going to be someone else”, he added.
Both CBA and Westpac have similar products to Apple Pay. It is only going one way.
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While there is a report the NAB is the closest to striking a deal with Apple Pay, Fairfax reports it’s more likely a smaller bank will be the first to move on an Apple deal. This level of innovation is here to stay.
