Australia Apple Pay could be far off as banks push back on Apple’s fees

Apple Pay iPhone 6

It appears that the expansion of Apple Pay into Australia could be farther off than some had hoped. According to a report today from The Sydney Morning Herald, Apple is in negotiations with at least four of the largest banks in Australia in order to form partnerships for Apple Pay in in the region. However, the report claims Apple is having issues in negotiations centered around the fees it collects from the currently supported Apple Pay markets of the United States and United Kingdom.

In the United States, Apple collects royalties from banks of 15 cents for each $100 spent using an iPhone or Apple Watch conducting an Apple Pay transaction. This 0.15% fee collected by Apple is sourced from the typical 1% processing revenue collecting by banks in the United States. According to today’s report out of Australia, this rate is about half of that for the banks, per transaction, in Australia, so the 0.15% cut that Apple wants for Apple Pay purchases in the region is tougher to accept.

The big banks are also reluctant to open their payments infrastructure to Apple for two other reasons. First, because they are being forced by the RBA to tip hundreds of millions of dollars into building the New Payments Platform, new infrastructure that will have real-time capability, there are concerns about Apple seeking to free ride on this investment.

Second, the negotiations are also challenged because banks are concerned about the prospect of Apple getting in between them and their customer at the point of sale, as banks recognise that future revenue growth will come from being the “interface” when customers pay for goods and services, which will allow them to cross-sell products.

The report adds that a smaller bank in Australia is likely to be the first to support Apple Pay. There is also speculation that banks in Australia are resistant to teaming up with Apple for mobile payments as the banks believe there could be more revenue to be made in the payments interface business in the future. Apple Pay first launched in the U.S. last October and expanded just recently, in July, to the United Kingdom. It appears that Apple Pay’s next landing spot will be Canada as soon as this fall, with China to follow next year.

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Comments

  1. The Yamanator - 7 years ago

    Come on Apple, you know the most logical next step to take!!….. The Apple Bank!!!!! :-)

    • vpndev - 7 years ago

      Not likely – that’s a regulated business. Have you not noticed GE getting out of banking lately ? This is one of the big reasons why.

  2. DamoTheBrave - 7 years ago

    I’ll take my business to the first bank to support Apple Pay.

  3. Smigit - 7 years ago

    While I’d rather hear talks are going well, at least there’s news talks are in place. Last news I heard on the topic was immediately following the announcement and before the Apple Pay US rollout where a few banks said they would look into it. Every time there’s a movie or music contract up for renewal there’s always concerns about talks going slowly anyway.

    Those two ‘issues’ don’t really look like anything that can’t be sorted out. So yeah, glad to see talks are in progress.

    • smithydll - 7 years ago

      The problem comes down to the two networks, EFTPOS transactions which have a negligible fee vs maestro/visa/amex transations which have a much larger fee. The debit cards the banks give out now support both and they prefer you to use credit, the card defaults to credit for paypass transactions. Some POS machines block the default credit transaction and route via EFTPOS for debit cards to save merchant fees (e.g. Woolworths). When the likes of commbank have carte blanche access to the NFC chip on Android I find it hard to believe they will tow the line with Apple when they have more to lose than gain. The big 4 paid for most of the NFC infrastructure, and EFTPOS is owned by the banks so they make the rules.

  4. Rich Davis (@RichDavis9) - 7 years ago

    Glad I wasn’t one of them.

  5. Rich Davis (@RichDavis9) - 7 years ago

    And everyone that’s listening to it isn’t paying for the service yet because the Free Trial is in effect. Just saying. It’s funny how people get suckered into marketing hype. :-)

  6. nathemflo - 7 years ago

    to many grammar mistakes:
    “Apple is in negotiations with at least four of the largest banks in Australia in order to form partnerships for Apple Pay IN IN the region. However, the report claims Apple is having issues in negotiations centered around the fees it collects in CURRENT the currently supported Apple Pay markets of the United States and United Kingdom.”

  7. Paul Van Obberghen - 7 years ago

    When I see how hard it is for Apple to negociate with BigBusinesses (Music, TV, Bank,…) just in the U.S. and some major countries, it is no wonder that most of these are never coming to Europe, which is a fragmented market of 27 countries (28, but I don’t count the UK which isn’t really part of Europe and wont be for very long anyway), each of which having their how sovereignties in each of the market. That is, negociating in Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden. Individualy. For each market. And they call it “the European Union”. No wonder the Brits are willing to go out of this mess…

  8. Kawaii Gardiner - 7 years ago

    It isn’t surprising given that Apple Pay was developed to address the abysmal security of the US EFTPOS system rather than it necessarily being something that is a ‘must have feature’ for those countries that already have chip and pin along with other security measures in place. There are also local alternatives to Apple Pay such as Semble which has a lot more backing in terms of carriers, banks etc. in NZ.

  9. appleisgrindingmygears - 7 years ago

    All I see this doing is raising prices on the goods sold by $0.15 cents to cover the cost of each transaction and now regardless if you pay with Apple Pay or with a credit card or cash your paying this bullshit fee. I never use Credit Cards and have always use cash. If I can’t afford to buy it with cash I don’t buy it except if I take out a loan.

  10. eswinson - 7 years ago

    It just takes one or two banks (Even smaller guys) to do it and the momentum will force the larger guys to cave. The customer doesn’t care if the bank takes issue with the fees. They want the feature and many will jump ship to a bank that offers it.