One of Apple’s best service ‘Apple Pay’ is facing some problems. Apple is reportedly facing resistance as it tries to roll out Apple Pay in Australia, as major banks in Australia don’t want to share the AU$2 billion with Apple that they receive as fees in exchange for technology. It is believed that Apple will face difficulty in marketing its technology to a market which already offers touch-less payment systems according to a report today from The Sydney Morning Herald. Apple is already in the throes of negotiation with four of Australia’s largest banks. Reports claim that Apple is having issues in negotiations due to the currently supported markets for Apple Pay in the UK and US.
In the United States, Apple collects royalties of 15 cents for each $100 spent using an Apple device to conduct Apple Pay transactions. This 0.15% fee collected by Apple is derived from the typical 1% processing revenue gathered by banks in the United States. According to reports from Australia, banks pay half the rate per transaction compared to other countries, so the 0.15% revenue that Apple stipulates for Apple Pay purchases in the region is a hard sell.
“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 customers at the point of sale, as banks recognize 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 Sydney Morning Herald states Apple Pay adoption is “sagging” in the U.S. just as competing services like Samsung Pay are coming into play. Rumours are flying that banks in Australia are resistant to work with Apple for mobile payments as major banks believe that developing their own payment interface could lead to greater retained profit. Apple Pay first launched in the U.S. last October and found its way to the United Kingdom in July. Next it seems to be heading to Canada and China soon After.
If Apple Pay ever makes it to Australian shores and that seems to be a long time away they may negotiate their deals based on the UK model of payment which negotiates lower rates than the US.