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Apple VP explains why Apple Pay took so long to get to Canada
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May 13, 2016, 10:59 AM
Following the wider launch of Apple Pay in Canada this week, Apple Pay VP Jennifer Bailey has given some insight into why the role out in different markets is not especially straight forward. While the deals themselves between the banks and Apple can take extended periods to negotiate, the IT infrastructure requirements at the back end also contribute to the time taken to get Apple Pay up and running. In the case of the Canadian market, all payment transfers between financial institutions must go through Interac, a system unique to Canada.

"Adding a new network to Apple Pay's platform takes new work for both Apple and the network itself," Bailey told Financial Post. "All of the partners - the banks, Apple and the networks - have to build up this new integration and do full testing." To this extent, Interac developed its own Interac Token Service Provider (TSP), taking a year and a half to bring it to fruition. Bailey added that since its launch in the US in October 2014, Apple Pay has now launched in six countries. "Consumers have spent billions of dollars in Apple Pay," she said. "We are adding one million new users per week."

Something that Bailey didn't address about the rollout in Canada was the steep price that Apple was able to charge in allowing banks to offer customers the convenience and security of Apple Pay. According to multiple sources familiar with the matter, the "Big Five" banks were not able to get the upper hand on Apple in the negotiations. In fact, the contrary was true. According to the The Globe and Mail, Apple is raking in $0.15 cents for every $100 transaction made on a credit card. This drops to $0.04 cents per transaction made on a debit card. This is apparently similar to the arrangements that Apple has made with banks in Australia and the UK.
( Last edited by NewsPoster; May 13, 2016 at 02:29 PM. )
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May 13, 2016, 11:20 AM
Greedy Canadian banks.
Charles Martin
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May 13, 2016, 07:26 PM
It's only "steep" to Canadian banks -- it is precisely the same rate charged in the US, and it comes from a reduction of the issuer's fee, not from the consumer. For perspective: card issuers typically charge between one percent (100 basis points) and 2.5 percent (250 basis points) per transaction. Apple is taking 0.15 (15 basis points) from the issuer's charge. Considering that what is provided is safer, stronger, faster *and* more convenient than what the banks themselves have ever built thus far, this strikes me as an extremely generous deal on Apple's part, quite frankly, and one that helps banks raise the bar on security.
Charles Martin
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