Apple proved a tough negotiator in payment talks with Swiss banks. Newly-uncovered details of the fees levied for using U.S. technology giant's digital payment services raise questions over its financial merits for traditional banking.
Big Swiss banks buckled under the heft of the Cupertino, CA-based company's influence in commanding terms and prices for linking up with its credit card services. Previously cloaked in secrecy, details reported by Swiss outlet «Finanz und Wirtschaft» (behind paywall, in German) illustrate that banks including UBS and Credit Suisse ponied up.
Apple takes a 12-basis-point fee for simple credit card transactions, the outlet reported – and another five basis points for web- or app-based transactions. Apple also commands 0.275 Swiss francs ($0.266) quarterly on every card, the outlet wrote. Swiss antitrust authorities prescribe credit card issuers an average «interchange fee» – the fee component banks earn – of 0.44 percent on domestic transactions.
Overcoming Reluctance
On that basis, Apple Pay clients need to spent at least 85.94 francs per quarter for the issuer to earn back at least the basic fees. Despite the comparably high price, Apple Pay looks to prevail in the Swiss market: the app is viewed as attractive and – for clients – inexpensive. This explains why few retail banks dare to refuse Apple's mobile payments system.
Swiss banks were initially more hesitant to join up with Apple pay, which has been available in the Swiss market for six years. They hoisted their homemade solution, Twint, which in turn roused Switzerland's antitrust watchdog.
The protectionist stance on Twint may have consequences for the lenders, depending on the outcome of the antitrust probe. Banks are appealing to Swiss courts to prevent former employees from testifying, the outlet reported.
