Apple has signed up more than 500 banks for Apple Pay, but some bank executives whose institutions are on board with the new payments system are feeling defensive, according to American Banker.
Apple’s terms represent “the most one-sided agreement I have ever seen,” said Michael Battagliese, senior VP and head of debit and emerging markets for Citizens Bank. Though Apple gets a piece of every transaction — reportedly 15 basis points on credit and a half-cent on debit that comes out of the bank’s share of interchange — the company provides no help to banks in making sure their cards are “top of wallet” for use, or helping users decide which card is best of each situation.
(Battagliese and other bankers made it clear their opinions were their own, not necessarily their banks’.)
Another source of bank-executive unhappiness is branding: During the Apple Pay enrollment process, industry analyst Richard Crone said he counted 26 “brandable impressions” of Apple but only three for the participating bank.
Leanne Hughes, head of debit and alternative financial solutions for M&T Bank, said she hopes Apple works with banks on a loyalty program linked to the iPhone’s Passbook app. There’s currently no built-in Apple Pay rewards program; instead, Apple is emphasizing the mobile wallet’s token-based security. “This is a prime time for security,” Hughes said.
But security alone may not let Apple Pay move the industry to a single mobile payment standard, said Sue Grathwohl, VP and director for debit, prepaid & HSA products for Fifth Third Bank. With competitors such as bar codes at Starbucks and QR codes for the CurrentC system being tested by Walmart and other big retailers, “it’s kind of like the Wild West out there,” Grathwohl said, “but it will come down to consumer demand.”
Citizens Bank’s Battagliese added, “I am still concerned about what will happen if it doesn’t work. The consumer will think he could have swiped or inserted a card in the time it took.”