For consumers who use Apple Pay, it’s not really an issue — the fees that Apple gets from big banks for credit card transactions.
But Apple’s biggest competitor on the horizon, Google’s Android Pay, reportedly won’t be able to charge banks a transaction fee when people use its mobile payments service.
That’s mostly a loss for Google. However, there ‘s a bright side for Android Pay. More card issuers may choose to join Google’s service because of the lack of fees. Android Pay also plans to offer rewards and loyalty programs with card issuers and retailers that could earn it more than those bank fees.
Banks give Apple a 0.15 percent cut of each credit-card transaction and half a cent for each debit card purchase when shoppers use Apple Pay. Not so for Android Pay.
Google predicts that Android Pay will be accepted at more than 700,000 U.S. store locations and more than 1,000 apps starting sometime this summer.
Google missed out on the chance to charge fees because Visa and MasterCard recently standardized their “tokenization” card-security services to prevent payments services, like Android Pay, to charge fees to banks. Apple made its agreements with the card networks before they announced their standardization in late May.
According to a report by the Wall Street Journal on the Apple-Android fee issue, bank executives, many of which have signed three year agreements with Apple, say they’re unhappy sharing fees with Apple. They may try to persuade the company to change its deals.
The Journal says that as Apple tries to expand Apple Pay internationally, the company will likely have to renegotiate its agreements with banks, and that could give the banks an opening to push against the Apple Pay transaction fees.