Three Years of Apple Pay

11. October 2017.

It has been three years since the initial agreements between financial institutions and Apple were signed, effectively launching Apple Pay. An article in CSCU’s The Payments Review raises the question if banks and credit unions should re-sign with Apple and continue to support their payment solution.

It’s hard to believe that three years has passed since Apple surprised the mobile payments world by stating that iPhone 6 users can make payments with the touch of a finger, beginning on October 20, 2014. About 500 credit unions and banks were among the initial issuers who agreed to a three-year term to participate, meaning their contracts are coming up for renewal. Many financial institutions signed on shortly thereafter. According to, the terms of the contract required the issuers to give up to Apple a half penny for every debit transaction or 0.15 percent of every credit transaction conducted through Apple Pay. These fees were over and above charges already assessed by the card networks and the processors. But those financial institutions, mostly larger or forward thinking credit unions and banks, wanted to be on the forefront of what was highly touted to be the evolution to the long-awaited “year of the mobile payments.”

Those initial FIs that were early adopters of Apple Pay not only were charged for the privilege, but also collectively spent millions in advertising, had to gear up their operations staff, and suffered some initial losses as unexpected fraud issues were discovered. And for what? Adoption has been far below expectations. But, can FIs afford to take Apple Pay away from those few cardholders, usually engaged customers or members, who actually use Apple Pay on occasion? And of course there is still the lingering thought that some day mobile will actually deliver the transaction volumes anticipated.

Should a credit union whose Apple Pay contract is coming up for renewal drop support, or continue? While it is an individual decision for each credit union, the answer should be – continue. Apple Pay adoption continues to grow, members are becoming accustomed to paying in-app by swiping a finger over the home button, and if a credit union drops support for Apple Pay, the member won’t change their buying habit, but they certainly will change the card that enables that purchasing habit. That’s a risk not worth taking.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

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