Apple agrees interchange fee rebates for m-payments

Ahead of the launch of the iPhone 6 next week, tech giant Apple has reportedly negotiated deals with several US issuers to give Apple back a portion of card-present interchange fees, around 15 to 25 basis points, on each transaction. The issuers have also agreed to extend card-present rates to Apple for all transactions involving their cards with Apple’s new mobile payments scheme.

Apple has agreed interchange fee rebates with US issuers

The deal was revealed by Tom Noyes, a financial technology investor and former head of channels at Citi. The issuers include JP Morgan Chase, Bank of America, Capital One, Citi and American Express.

The iPhone 6 is widely expected to incorporate NFC functionality alongside the Touch ID biometric sensor, enabling Apple to make a move into mobile payments. However, the card-present discount will not apparently be universal, even across Apple’s new contactless payment methods including NFC.

On both the new iPhones and its watch, Apple will also launch an e-commerce/m-commerce buy button in its EasyPay service. This will not receive any card-present or preferential rate, according to Noyes, who wrote: “This is less a function of in-app purchases and more a function of third-party e-commerce sites having an EasyPay button for fast iOS check-out.”

According to Noyes, the only way that Apple could be getting any money from issuers is if they negotiated that the issuers extend a rebate on the fees they collect from the merchants as a condition of allowing their cards in Apple’s digital wallet. It is unclear whether Apple is also striking deals with merchants to enable payment using its mobile payments scheme and passing some of Apple’s savings back them in the form of lower fees or rebates.

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