BIRMINGHAM, Ala.—The lifespan of Apple Pay’s transaction fees may be shortening, according to one expert.
Bill Hardekopf, CEO at LowCards.com, sees decisions by Visa and MasterCard to provide tokenization services for free, as well as Android Pay opting not taking a cut of the transaction, as having a big impact on Apple’s ability to continue to charge .015% on every credit card transaction and a 0.5% on debit card purchases.
“Android Pay will not get a cut of the interchange fees on transactions,” reminded Hardekopf. “This is drastically different than Apple Pay.”
When Apple Pay launched without a strong mobile payments competitor in the market the company was able to negotiate its current fee structure with credit unions and banks that rushed to sign on. But as mobile payments competition increases, including the impending launch of Samsung Pay, and with free tokenization is available from the major payments networks, Apple may have to make adjustments to its fee structure, asserted Hardekopf.
“Apple Pay fees are not popular with banks, and many of these institutions hope this new agreement with Google combined with the free tokenization from Visa and MasterCard will eventually lead to a reduction or an elimination of the Apple Pay fees,” he said.
Hardekopf noted that Apple and Google both see the main revenue opportunities in payment systems coming from advertisements and a loyalty program.
“One estimate is that a consumer will be worth $300 to Apple or Google from the marketing and advertising fees,” Hardekopf said.