Apple Pay requirements for card issuers are revealed

According to the source, which makes references to Sanjay Sakhrani, an analyst from Keefe, Bruyette & Woods, who recently published some main points from the Apple’s ‘commercial agreement’ with credit card companies and issuing banks, the collecting process involves credit card networks collecting Apple’s transaction fees from the card-issuing banks and later transferring the aggregate to Apple.

The report by the analyst also mentions that Apple is requiring card-issuing banks to allow at least 95% of MasterCard or Visa cards in their portfolio to participate in Apple Pay. The card-issuing banks are also required to collect loads of operational data for Apple. The revealed term sheet shows data points across three dozen categories. The data includes attributes like purchase volume data for both debit and credit cards, in-store vs in-app purchase mix, the top 100 merchants by purchase volume and average purchase amount.

This shows that the relationship between Apple, the credit card companies and issuing banks is pretty intense. Sanjay is also of the view that the credit card companies are highly involved in processing payments and are playing major operational roles for Apple. Apple also has the power to request, up to two times a year, that the amounts the issuers pay are accurate. Apple reserves the right to seek advice from independent auditors to verify this accuracy, the source adds.

In addition to sharing details on Apple’s cut of transactions, the report has given insights on requirements from Apple’s terms and conditions that card issuers must follow to participate in the new payments service.