I wonder if Apple is taking more than a 50% haircut on this post year one.
Credit card fees come out of their share and those could very well account for the bulk of the 15%. Even if Apple pays nothing in payment processor markup, there is a fixed minimum "interchange" cost that everyone has to pay (even Walmart). For "ecommerce" it's:[1]
Credit: $0.10 + 1.8-2.4%
Debit: $0.21 + 0.05%
Those 10-21 cent minimums make a big dent in smaller transactions. For a monthly recurring charge of $1.99, already 6% of that goes to credit card interchange. That leaves a 9% gross margin for Apple (4% if debit).
At $0.99, Apple's margin drops to 3% on credit, and they lose money on a debit card.
Now, there is a "small ticket" interchange category that one would hope these transactions would qualify for. That's just $0.04 + 1.65%. But it says it requires a swipe, so I'm not sure. From a fraud risk standpoint Apple Pay should be treated better than a swipe, but I'm not sure if the rules have caught up yet.
Credit card fees come out of their share and those could very well account for the bulk of the 15%. Even if Apple pays nothing in payment processor markup, there is a fixed minimum "interchange" cost that everyone has to pay (even Walmart). For "ecommerce" it's:[1]
Credit: $0.10 + 1.8-2.4%
Debit: $0.21 + 0.05%
Those 10-21 cent minimums make a big dent in smaller transactions. For a monthly recurring charge of $1.99, already 6% of that goes to credit card interchange. That leaves a 9% gross margin for Apple (4% if debit).
At $0.99, Apple's margin drops to 3% on credit, and they lose money on a debit card.
Now, there is a "small ticket" interchange category that one would hope these transactions would qualify for. That's just $0.04 + 1.65%. But it says it requires a swipe, so I'm not sure. From a fraud risk standpoint Apple Pay should be treated better than a swipe, but I'm not sure if the rules have caught up yet.
[1] https://usa.visa.com/dam/VCOM/download/merchants/Visa-USA-In...