Apple is reportedly negotiating with financial institutions to bring Apple Pay to Israel.
A Hebrew-language report says that Apple has been meeting with banks and credit card companies to introduce its contactless payments system. However, Apple’s fee demands could potentially be a source of disagreement between Apple and the financial institutions in question.
Apple is asking for a 0.15% to 0.25% cut of every Apple Pay transaction. This is between one quarter and one third of the money a credit card issuer makes from a transaction. In other words, Apple Pay would significantly cut into their profits.
“It is disproportionate, and constitutes an exploitation of its status and power,” said one source with knowledge of the discussions.
Could fee demands hurt Apple Pay in Israel?
Apple introduced Apple Pay back in 2014. Since then, it’s been gradually rolling out the service around the world. One year after Apple introduced Apple Pay, CEO Tim Cook visited Israel and met with the country’s president, Reuven Rivlin. Cook talked about Apple’s love for Israel as an “ally for the U.S.” and a “place to do business.”
Israel has strong ties with Apple, largely thanks to its prominent tech scene. It is the location of Apple’s biggest R&D center outside the United States. However, there have also been challenges along the way. Apple still has yet to open its first official retail store in the country. Last year, a report claims that negotiations between Apple and the mall owner of the proposed location fell apart over financial terms.
Apple skirmishing with a bank (or multiple) over Apple Pay terms and conditions also isn’t unprecedented. While the situation is now resolved, it took a fairly heated confrontation before Apple was able to get all of Australia’s major banks on board for Apple Pay.
Hopefully, in the case of Apple and Israel, this issue can be resolved soon. Cult of Mac will keep you posted.