Apple Pay may have finally launched in China, but it seems that Apple flinched first in its negotiations with Chinese banks over their adoption of the service.
At least, that’s according to a new report — citing “people with knowledge of the matter” — which claims that Apple will only earn about half of what it does in the U.S. for every Apple Pay transaction in China.
Chinese banks have allegedly agreed to pay around 0.07 percent of each transaction to Apple, compared with the 0.15 percent of each purchase Apple gets from banks in the United States. Not only that, but Apple will only be able to start collecting the fees in two years time.
“Apple is tough, but so are [China’s] four [biggest] banks,” one employee of one of the major Chinese banks said. “The final agreement is a result of compromise from both sides.”
Apple Pay made its debut in China last Thursday, although things didn’t initially go as smoothly as hoped — as 38 million bank cards were registered in quick succession on the service within just 12 hours of it launching, overloading Apple’s servers.
The 19 Chinese banks Apple made its initial deal with likely knew they had Apple at a disadvantage in negotiations after Tim Cook publicly called launching Apple’s mobile payment service in China “top of the list” in terms of priorities.
While early adopters have been able to get these favorable rates, however, Chinese banks which hop on the Apple Pay bandwagon later on may not be able to leverage the same deal as their predecessors.