Apple Inc. will bring its mobile payment Apple Pay to Canada this fall. If pushed through, Canada will be the first country outside the United States to get the service and will mark the start of Apple Pay’s international expansion. Apple Pay enables people to pay for goods through their iPhone or Apple Watch in a wireless reader at retail locations. It supports mobile payments for debit and credit cards.
According to sources, there is an ongoing negotiation between Apple and some banks in Canada, which account 90 plus percent of retail bank accounts, hence, could provide Apple near ubiquity for the launch of Apple Pay if they will reach an agreement. Such banks are RBC, Bank of Nova Scotia, TD Bank, National Bank of Canada, Canadian Imperial Bank of Commerce and Bank of Montreal. They are in talks for what would be beneficial to both parties so that Apple Pay will succeed, as it has been in the U.S. since October 2014.
The Cupertino-based tech firm enjoys a 20 percent share of the smartphone market in the world. While these figures make Apple’s business plans to be promising enough, the banks in Canada are not always happy with the proposal. Security vulnerabilities like what the U.S. banks experienced, are something that they are likewise concerned about. For the moment, it is also not certain whether the six major banks will launch Apple’s payment service at the same time.
With Apple Inc. having approximately one-third of the Canadian iPhone market, according to research company Catalyst, the country is indeed attractive for the Apple Pay to thrive. Furthermore, Canadian merchants already have machines which enable contactless payments with near-field communication, which what Apple Pay requires. Indeed, if Apple Inc. will bring Apple Pay to Canada this fall, the payment service will likely be a hit.
Apple launched Apple Pay in the U.S. last October, and has become a popular service in the budding market of mobile payments. According to the Cupertino firm, Apple Pay accounted for two-thirds of contactless payments on three major credit card networks as of late January. The firm plans to make the service internationally available, with Canada and China as strong potential targets.
What sets Apple Inc’s mobile payment service for its mobile devices is that it requires some negotiations with regulators and potential partners, which can take longer time. Its hardware products can be rolled out globally fast, with less tweaks in individual markets.
Apple Inc. may not be in good timing in its talks with Canada’s “big six,” as Canadian banks are facing a decline revenue from credit cards, and worry about the need for absorbing the higher mobile payment costs. While payment networks are not charging high fees for mobile payments, merchants believe the fees would increase once mobile payments become a common thing.
As Apple Inc. will bring Apple Pay to Canada this fall, it might not be easy. According to people familiar with the matter, the banks in Canada are likewise partly concerned of the business terms with Apple Pay, which seems “onerous,” as it may be possible they could face higher costs than U.S. banks. Canadian banks may have a base case from 15 to 25 basis points on Apple Pay transactions, while U.S. banks have only 15 basis points, plus half-a-cent on debit transactions. However, Apple has not been open about its take from Apple Pay.
By Judith Aparri
Photo courtesy of Monty Metzger – Flickr License