There has been some confusion about the so-called “discount” that Apple Inc. negotiated with card issuers that makes Apple Pay transactions correspond with the lower card-present (CP) rate, rather than the higher card-not-present (CNP) rate.<\/p>\n
It is confusing. A Sept. 16, 2014, Mercator Advisory Group blog post might clarify matters a bit. In the blog, Mercator analyst Nikhil Joseph wrote that credible reports suggest Apple “seems to have negotiated with card issuers for discounts worth 15\u201325 basis points on each Apple Pay transaction in exchange for the reduced fraud levels ensured by Touch ID.”<\/p>\n
Joseph went on to say that a Bank Innovation report claimed that the “networks have agreed to process all in-store Apple Pay transactions initiated via near field communication technology on the new iPhone 6 at ‘card-present’ rates. In-app purchases made through Apple Pay, however, will continue to be processed at ‘card-not-present’ rates. This is despite the fact that from a technical perspective, very little that is different is happening in either case.”<\/p>\n
But it is clear that CP versus CNP can add up to a lot of money. “Stripe, a popular payment gateway services provider that has announced support for Apple Pay, currently charges merchants\/developers 2.9 percent and 30 cents for each successful transaction it processes,” Joseph wrote. “Card-present rates for in-store credit card transactions, on the other hand, cost merchants about 2.10 percent and 10 cents per transaction a difference of more than 80 basis points. For a hypothetical merchant that does business worth $10 million annually through a mobile app with an average ticket size of $50, this difference in payment taxonomy could mean as much as $120,000 in lost profits for the year.”<\/p>\n","protected":false},"excerpt":{"rendered":"
There has been some confusion about the so-called “discount” that Apple Inc. negotiated with card issuers that makes Apple Pay transactions correspond with the lower card-present (CP) rate, rather than the higher card-not-present (CNP) rate. It is confusing. A Sept. 16, 2014, Mercator Advisory Group blog post might clarify matters a bit. In the blog, … Continue reading Confusion Over Apple Pay’s Discount<\/span>