Apple might be a hardware first company which creates software only to drive sales of its physical devices, but that doesn’t mean it can’t earn a bit of money from its services, right?
According to a new Bloomberg report, Apple will earn a fee every time its newly-announced Apple Pay service is used to make a purchase.
The deals were reportedly brokered by Apple with each bank individually and will give Apple a sizeable share of the $40 billion generated by banks each year from so-called swipe fees for credit card payments. JPMorgan, Bank of America and Citigroup have not yet disclosed the terms of the deal.
Apple Pay was announced yesterday by Tim Cook, based on a long-time patent by Apple for NFC payments. It will add an additional element of security to payments by way of a dynamic security code (a process called “tokenization”) which replaces the static data on the magnetic strip of a typical credit card.
“Having a partner like Apple really was like catching lightening in a bottle,” Visa’s head of innovation tells Bloomberg. “Given their ability to effectively manage their platform, and get folks across multiple industries, merchants, banks and networks to cooperate really was the thing that catalyzed the whole thing.”
Source: Bloomberg
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
6 responses to “Apple gets a cut of every Apple Pay purchase you make”
“Apple is doomed” they say…
Some things I just thought of (others may have similar comments elsewhere). While it does seem cool and fast, will it really be fast? Won’t you still have to access your phone for each transaction to select the card to use for the transaction? Will that be that much faster than getting the card from the wallet?
It does seem safer than handing your card to the clerk and giving them your id as well.
They need to work on sit-down restaurants to get the wait-staff a portable NFC reader device, or get add iBeacon supported and installed. Also would need to work out how to add the tip.
I do think it is a very good start.
Of course way faster than real card.., remember… You have to take the paper receipt from the clerk and file it too; also some places, you need to enter your email for digital receipt.
Restaurants, use OpenTable to pay for you if you book thru it.
It IS much faster, you can use it without even unlocking the iPhone: just hold it close to the NFC reader and put your finger on the touch ID. Selecting a different card takes a single wipe and tap. And it will be an even faster process with the iWatch, you don’t even need to take out your iPhone.
In restaurants you can pay through the OpenTable app which also integrates Apple Pay in-app.
I doubt the Waffle House take open table reservations.
As for why it has not taken off yet is the gaping security hole that is smart cards. They broadcast continuously so every person you bump into on the street can swipe and process a transaction. Apple’s solutions closes that hole.
“Having a partner like Apple really was like catching lightening in a bottle”
Lightning.