Apple Pay in Australia faces $2 billion fee sticking point with Aussie bankers

“Australia’s largest banks are fending off the world’s largest technology company, Apple, as it tries to muscle in on the hotly contested payments market,” James Eyers reports for The Sydney Morning Herald.

“Fairfax Media understands fees are a big sticking point in the negotiations, with big banks not willing to give Apple a slice of the $2 billion a year they earn in interchange fees, which are paid by merchants for use of payments infrastructure,” Eyers reports. “In the United States, Apple is believed to earn about 15¢ on every $100 of transactions. It is understood Apple has been asking for the same amount of interchange fee in Australia.”

“But Australia’s big banks will not agree to this level given that interchange fees in Australia are about half the US level – equivalent to an average of 50¢ $100 of transaction compared with about $1 for $100 of transaction fees in the US… Commonwealth Bank of Australia chief executive Ian Narev said CBA had already offered the same functionality as Apple Pay through its app – for users of Android phones – for two years, so it was difficult for Apple to argue it is providing much value,” Eyers reports. “Apple is also negotiating from a position of weakness given that the take-up of Apple Pay in the US appears to be sagging. It is also facing competition from Samsung, which announced last week it would launch Samsung Pay in the US on September 28.”

Read more in the full article here.

MacDailyNews Take: Another test for Eddy Cue.

The smart bank(s) will realize that iPhone users are the ones who actually have disposable income and the proven will to spend it, not to mention open bank accounts in which to store and manage it.


  1. That Commonwealth Bank of Australia chief executive Ian Narev is really hard core saying that “Apple’s attempts to offer Apple Pay in Australia won’t be as easy as it was in the US given Australian banks’ record of innovation.”

    “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,” and “There is functionality associated with Apple Pay that we have had in the market for 18 months to two years.”

    He’s right, those with the Commonwealth Bank certainly are shrewd when dealing with americans as clearly illustrated by their commericals:

  2. Australia went to chip cards years ago, so most shops today have “touch and go” facilities for cards. I am not sure in this environment that it is more efficient to use a phone than a card. Also Aussies don’t carry as many cards as Americans (I only have 2 and many people only have 1.) Debit cards are popular here, store cards not as much.

    And for those (generally smaller) shops that don’t have Touch and Go you will be inserting the card and entering your pin – Apple Pay won’t work.

    Bottom line: Apple Pay is not as big a deal downunder…

    1. Is there no chip-card fraud in Australia? I admit that touch and pay with a chip card is pretty much as convenient as Apple Pay when used with the iPhone. But chip-cards can be used by anyone who gets their hands one, up to a certain limit. Apple Pay’s security offers a reduction in this type of misuse and fraud. And, with the Apple Watch, convenience is trumped by not having to reach into a pocket for anything, or even carry a wallet with cards.

  3. Dunno what happened there: MDN “saved” my comment somewhere…

    Goodo… Maybe it will turn up…

    Bottom line: Apple Pay is not a big deal downunder. We use fewer cards, and all are chip cards, and most shops have touch and go – so no signature or pin entry.

    Dunno if I’d bother using my phone instead of my card – it’s a bit clumsy…

    1. “Dunno if I’d bother using my phone instead of my card – it’s a bit clumsy…”

      I live in a country too where chip cards are common..
      do you realize that if you lose your chip card a thief can buy all kinds of things ($$$$) with the tap function before you cancel it? Imagine if you didn’t realize you lost it for a day and the thief went on a spending spree shop after shop.

      With Apple Pay tied to your fingerprint, it’s impossible.

      1. While I agree that is a possibility I doubt it would go very far.. Those pesky algorithms that generate a spending profile of you will probably prevent charges after the first few.. Quicker if the purchase amounts are larger than usual.

        1. In reality those pesky profiles that generate a spending profile of me have proved to be totally unfit for purpose. They completely failed to pick up on a cloned card of mine that was used to buy expensive international flights in Italy within minutes of me using my card in person several times in the UK. They also declined an on-line purchase of an iMac from Apple on Black Friday because it was deemed to be unusual, even though there were three other large purchases from Apple in the preceding couple of months and other large purchases from Apple on previous Black Fridays.

          I have no confidence whatsoever that their algorithm would spot a sudden rash of small transactions if my contact-less card had been stolen. The credit card company would get better results reading tea leaves rather than relying on the profile they have generated about me.

          1. That’s unfortunate. I guess there will always be outliers for any preventive system..Since the CC companies continue to rely on it I expect it works more often than not.

      2. Stolen cards are not the publics problem. As soon as you realize your card has been lost or stolen you report it to the bank Its the banks responsibility from that point on. We (aussies) are not charged for purchases made with our cards that we did not make. I’ve even received phone calls from my bank if my card is used to purchase items that are not part of my usual pattern or very expensive. Apple pay is just not impressive in a country that has had touch and go/swipe cards for years. I was in the U.S a few months ago and was surprised by the archaic need to sign whenever I used my credit card.

        1. “As soon as you realize your card has been lost or stolen you report it to the bank Its the banks responsibility from that point on. ”

          like I pointed out what about the purchases done by the thief BEFORE you realized it was missing and reported it?
          even so perhaps the bank will believe you and reimburse it as they don’t want hassles but you’ll have to convince them and it’s up to their discretion .

          Chip cards replaced magnetic as there was more security. Apple Pay has more security than chip cards but if you think better security is NOT IMPORTANT there’s nothing i can say about it…

    2. Many of us have Apple Watch and would pay that way but iPhone is something that most of us carry in our pockets just like some of you carry wallets in your pockets that have Touch and Go credit cards in them that you have to pull out of your wallets that are in your pockets.

      Hmmm . . . I wonder which is easier to use? A credit card or an iPhone? Think about it.

      1. As SunbeamRapier has said most people there carry only one or two cards. If only one of those cards is a touch and go why do you even need to take it out of your wallet? Wouldn’t it be similar to taking the iPhone out of your pocket sans the fingerprint reader? Many such chip cards I’ve come across just have to be within inches of the reader and can be in a wallet or other type of card holder.

        1. As you pointed out, many people have two cards in their wallet. You likely have not used Touch and Go or Tap and Pay cards. They don’t reliably work through a wallet and definitely will not work when a second card is present.

          Step across the border to Canada where Tap and Pay is nearly everywhere. I personally don’t ever use cash and don’t carry photos in my wallet and really only need a wallet to carry a drivers license in my wallet. Apple will hopefully get rid of my wallet entirely.

          1. Yes, I understand if you have multiple such cards in your wallet it either doesn’t work or doesn’t work well, thus my specifying that only one such card is in the wallet.. I use a chip card in Japan not for normal purchases but for riding the bus/local train and since it is the only card in my card holder (among a few others) it works reliably for me. It’s great that you are able to practically do away with a physical wallet.

  4. If the fee pot is smaller, ask for a smaller share. I Don’t see a problem with that.

    The whole point of Apple Pay, is to provide a secure enclave for POS payments. If such a thing exists in AU, then maybe Apple has to compete for the market.

    Fraudsters take the path of least resistance. Right now USA is an easy mark. When technology takes over, then criminals will seek new markets. Does Australia want to be the new focus for fraud? I don’t think so.

    Apple Pay is in the US and UK. Now, let’s take care of Canada, Australia and South Africa.

  5. This need not be a fixed dollar amount; it can be a fixed percentage of transaction. Also, I think Commonwealth Bank is whistling past the graveyard. If they think that *any* application that runs on Android phones is as secure as Apple Pay, they’re fooling themselves. And Apple’s model is a general model serving multiple vendors thus providing *users* with a choice – which provider offers the most cash back? for what sorts of transactions? Plus while it’s not clear here, I would guess that Apple’s model in that is obscures the credit card number before it’s even set up on the phone is obviously more secure than chip & pin.

    1. I think it actually is already a fixed percentage of transactions, not any fixed dollar amount. Perhaps to ‘streamline’ the policy instead of being a percentage of the transaction AMOUNT, the Apple Pay fee should be a percentage of the transaction FEE for the transaction. This would normalize the Apple Pay fees charged to banks across banking systems that have varying transaction fees.

  6. I have an iPhone and a CBA account in Australia and have pretty similar functionality to Apple Pay through the CBA app and one of its pay stickers on the back of my phone. I turn the sticker on and off via the app, I choose which account the sticker is linked to in the app. Whilst Apple Pay Would make it easier for me as a customer, as I can use it with any of my banks, I’m not sure the banks would be so keen. Currently I have to be loyal to CBA, but Apple Pay would mean I could use other providers cards which takes me out of the closed Eco-system of CBA. I’m not sure banks here would be so keen to lose control over its customers, and a loss of the interchange fees for not a lot of other benefit. Plus fraud clearly doesn’t have such a big impact on the profits of Oz banks as they outperform every other business!

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