(Photo : GettlyImages/ SOPA Images ) Apple PayApple and US banks’ relationship is starting to show strain, according to a new report.
The report stated that major banks like Capital One, JPMorgan Chase, and Bank of America are unhappy with the costs linked with Apple Pay transactions, especially after Apple introduced its own Apple Card product back in 2019.
Apple vs. US Banks
According to The Wall Street Journal, the tech giant agreed not to build a card processing network to compete with Visa and Mastercard. It is part of its push for Apple Pay adoption.
Banks pay Apple a certain fee whenever a cardholder uses the card for an Apple Pay transaction. It is a portion of the existing interchange fees.
The fees vary worldwide and by the card issuer, but in the United States, it is believed to be 0.15% of a credit card transaction and 0.5 cents for a debit card transaction.
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What the Banks Want
The Wall Street Journal reports that US banks want the fees to change. The banks even asked Visa to change how it processes certain Apple Pay transactions. Banks are now asking that the fees that are paid to Apple be lowered.
Visa has agreed to implement this change in 2022, but Apple and Visa are currently in discussion, and the changes may be dropped. Apple executives have told Visa that they do not want the changes to be implemented.
The report stated that the change would apply to all recurring automated payments. If the changes happen, this would mean that Apple would not get fees on recurring transactions like streaming services and memberships processed with Apple Pay after the first transaction.
Visa revealed its planned technical change with some banks in the next few months. A document reviewed by the Journal did not mention the fees once the change was implemented.
However, the document revealed a change to the tokens that Visa uses for mobile-wallet payment, according to 9to5Mac.
Visa issues a special token whenever a user loads their credit card onto Apple Pay. It then replaces the user’s card number.
This process lets the card work on Apple Pay, and it also helps keep the credit and debit card secure from a data breach.
Apple Pay’s security was questioned earlier this year after researchers. Brinkwire Summary News.