Apple Pay gets a cut of debit card (not just credit card) purchases, analyst says

by Ron Mazursky 0

An equity analyst with Keefe, Bruyette & Woods has seenthe agreement between credit card companies and issuing banks relating toprocessing Apple Pay payments and has confirmed the previously disclosed 15basis point fee per credit card transaction and .5 cents per debittransaction. In addition, the creditcard networks will collect Apple’s fees and transfer those funds to Apple. In addition to the fees, Apple requirescard-issuing banks offer Apple Pay to at least 95% of their MasterCard or Visacards issued.

The analyst reports that“The term sheet lays out data points in “almost three dozen” categories,Sakhrani writes. The data include things like purchase volume data forboth debit and credit cards, in-store vs. in-app purchase mix, the top 100merchants by purchase volume, and the average purchase amount.”

The analyst, Sanjay Sakhrani, believes that the paymentnetworks are highly involved in processing payments, but doesn’t explain inwhat ways.

“Visa and MasterCard,beyond the security aspect of tokenization, seem to be playing a largeoperational role for Apple in the platform, which is interesting and makes themquite relevant,” he writes.

The metrics that are being requested by Apple are notsurprising. Apple needs to have some way of monitoring the success of Apple Payand they’ve developed a scorecard of sorts to achieve that goal. Outside of tokenization and the relatedrouting, clearing and settlement responsibilities which are the normal rolesfor the payment networks, it would be interesting to see what other operationalroles Sakhrani writes about for MasterCard and Visa.

Overview by Ron Mazursky, Director, Debit Advisory Service for Mercator Advisory Group

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