Apple to rake in fees from banks with Apple Pay mobile payments platform

“Apple Inc. will reap fees from banks when consumers use an iPhone in place of credit and debit cards for purchases, a deal that gives the handset maker a cut of the growing market for mobile payments, according to three people with knowledge of the arrangement,” Elizabeth Dexheimer reports for Bloomberg.

“Under deals reached with banks individually, Cupertino, California-based Apple will collect a fee for each transaction, said one of the people, who requested anonymity because terms aren’t public,” Dexheimer reports. “While that gives the tech company a share of the more than $40 billion that banks generate annually from so-called swipe fees, lenders expect to benefit as consumers spend more of their money via mobile phones and other digital devices, the person said.”

“The mobile-payments market will probably more than quadruple to about $90 billion by 2017, according to Forrester Research. The people familiar with Apple Pay didn’t specify the size of the fee, which they said could vary, or whether it’s tied to the value of purchases,” Dexheimer reports. “In an online introduction to Apple Pay, the company said it won’t charge users, merchants or developers for transactions. Spokesmen for JPMorgan, Bank of America and Citigroup declined to comment on the terms of their deals.”

Read more in the full article here.

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      1. This problem is very prevalent in the US, because the American banks have been very slow in adopting embedded chips in credit cards (coupled with a PIN code). Overseas, it is now practically the only way to pay with a credit card — a hand-held chip reader with a numeric keypad. The chip and PIN combo significantly reduces the ability of thieves to just get the card number and abuse it. Because of the slow adoption of this feature, American banks are writing off over $7 billion every year, more than the rest of the world combined.

        ApplePay has a chance of reducing this number significantly.

        1. MC noticed that my ATM card was being used in (Horrors!) Canada! They called my home to verify the purchases, but I wasn’t home BECAUSE I WAS IN CANADA, so they stopped the card. Brilliant!

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