this post was submitted on 12 Dec 2023
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Higher rates? Do customers pay more for using Apple Pay than any other solution where you are from?
I know shops pay a fee, but never heard it to be on the customer to pay.
It's common in Australia to tell customers that cc card fees are added to the bill. Not everywhere but also not surprise.
Your country + my country is a small share of global market, unless you're in China.
The key thing though is that Apple Pay is still just a credit or debit card. There’s no extra fee for the merchant or customer. It costs the same to process as using the physical card.
(OP commenter here again) This is correct.
Apple Pay charge a flat rate (around 0.1 to 0.2%) taken from the interchange fee. This is charged to the issuer specifically, i.e. the bank that issued the payment card.
The card network (visa, MasterCard, etc. also charge a flat fee to the issue for each transaction to the issuer, similarly to Apple Pay.
Issuers generally don't increase merchant fees to account for Apple's fee because it is highly negligible.
(As for merchants, they may charge you the entire interchange fee on top of your bill, but the Apple Pay part is still negligible.)
Take an example of a $100 purchase: interchange fee is around $2, of which Apple takes 0.15%, or 0.3¢. Its very, very low because Apple aims for high volume, and doesn't want merchants or issuers to discourage use (think "WE DONT TAKE AMEX" signs).
That means they get high volumes of transactions, likely in the range of millions an hour worldwide, and so they still make money hand over fist even at this extremely low rate.
(Apologies if you already know this stuff, thought I'd share anyway as it's my area of work!)
Well but guess where the merchants get their money to pay for that expense. If it increases the business's cost, it ends up being paid by the final consumer.
Apple Pay doesn’t increase the business’s cost.
The higher rates are passed on to the merchant to eat, just like any other payment processors.
But the merchant is in charge of what payments are accepted.
To the consumer, it will be no different. Apple will just be cut out as the useless middleman they are.