Retailers really don’t like paying the fees for your Apple Card

Apple Card completely rethinks everything about the credit card. It represents all the things Apple stands for. Like simplicity, transparency, security, and privacy. You can buy things effortlessly, with just your iPhone. Or, if Apple Pay is not yet supported by the merchant, use the Apple‑designed titanium card anywhere in the world.
The physical Apple Card

Jennifer Surane for Bloomberg Businessweek:

This holiday season will be the first for the Apple Card, the highest-profile new credit card in years. And every time a customer waves an iPhone at the register to use the new card, a retailer may feel an extra pinch on its profits.

That’s because the card, marketed by Apple and backed by Goldman Sachs Group Inc., is designated “elite,” which allows it to levy significantly higher interchange fees on each swipe or tap. Those fees aren’t paid by the consumer but by the merchant as part of the cost of accepting credit cards. A grocer can lose more than half its profit on a sale when someone pays with an Apple Card, or one of its elite competitors, rather than a normal card. Elite cards impose higher transaction fees to support generous reward programs for their customers.

Card networks tell merchants the higher costs are justified because premium cardholders also have more buying power — so they’ll spend more… The average purchase made with premium-branded Visa cards was $50 higher than those made with regular Visa credit cards. But the cards have long irked retailers. They have no choice but to pay the higher fees for elite plastic if they want to accept any of a network’s credit cards. A store can’t turn down [an elite Visa card] and still take the others. Mastercard Inc., the Apple Card’s network, has a similar arrangement.

MacDailyNews Take: What else is new? This isn’t really about Apple Card — Bloomberg Businessweek is just using Apple as a headline hook, as does virtually every media outlet — this is about retailers not wanting to pay elite card fees. If they really don’t want to pay these fees, retailers should offer incentives for customers to use debit, cash, or, God forbid, checks. (Don’t you just love being stuck in the grocery line behind that old lady writing out her paper check?)

Of course, the way retailers feel about elite cards goes a long way toward explaining why some balk at accepting Apple Card.


  1. Thank the U.S. Congress, which receives significant campaign contributions (i.e. bribes) from the banking industry . . . In the European Union, laws have been passed which limit the amount that credit card companies can charge for interchange fees . . . Why doesn’t the U.S. have similar laws? Simple. Because the banking industry and their lobbyists control the bankroll for every Congressman seeking reelection. A politician who speaks out against the “obvious” excesses of Visa / Mastercard would commit career suicide, and would become a “former” Congressman . . . just a friendly reminder for any readers who live under the illusion that we live in a democracy.

  2. The article points out that Elite card users buy more expensive stuff.

    What they don’t emphasize is that more expensive stuff usually have higher profit margins, way higher. The total profit amount is also bigger. (Although this example is not exact as I’m talking manufacturers vs retailers, but since this is MDN, note high end iPhone at 20% market share makes more profit than all Android phone makers put together)

    The example Bloomberg (not the biggest fan of Apple) uses is the Grocer (” A grocer can lose more than half its profit on a sale”) . Groceries have notoriously low profit margins. ( Small business chronicle : “Grocery store profit margins typically range from 1 percent to 3 percent”)

    Bloomberg is using a click bait Apple as example and the extreme grocery position to make a point.

    I’m not saying retailers don’t have an issue but I just wanted to point those things out.
    (Do low profit businesses like groceries have special deals with card companies? if not they should collectively bargain with them)

    I also note in many parts of the world including highly industrialized Japan many small retailers and restaurants don’t accept credit cards. Bigger chains won’t accept them unless the sales crosses a certain amount.

    1. “The article points out that Elite card users buy more expensive stuff.”

      actually the article might not have, as it might just mean the total amount on a bill.
      Anyways I still stand by most of my points.

  3. Awwww. I feel so horribly for the multi-national/billion dollar retailers. They’re gonna have to deal with a “pinch” in their profit margin.

    Meh, so what?

    Fck ‘Em.

    1. What about the small businesses that survive via online sales? They get crap discounts from wholesalers, shafted by the shipping companies, and killed by dealing with one-size-fits-all state/federal regulations and fees. Yes, most of them take credit cards and they absorb the 3-4% vig, it comes right out of the owner’s pocket. I’m sure they will be overjoyed when you whip out that shiny white card that hits them for 6%.

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