Apple has entered into negotiations that could bring Apple Pay to Israel. The tech giant is now in talks with Israeli banks and credit companies, although the two sides are currently at odds over Apple’s high commission fees, which are usually somewhere between 0.15 and 0.25 percent of each transaction.
While those numbers may not be large in absolute terms, they represent at least a quarter (and possibly as much as a third) of the revenue that credit card companies make from those transactions. As a result, Apple would be taking a fairly sizable chunk out of those companies’ already limited credit profits.
In the past, Apple has been known to lower its commission in order to gain access to a market, with China standing as the most obvious example. However, Israel has a much smaller population than China, so Apple may not be quite as motivated to adjust its standard fee.
The report itself comes courtesy of the Hebrew-language website Calcalist, which cites people close to the negotiations. Calcalist notes that Israel only recently adopted the EMV standard, a move that almost certainly precipitated the latest negotiations with Apple. The EMV standard enables contactless NFC payments with cards and mobile devices, including smartphones.
The report goes on to suggest that Apple’s closed ecosystem is also proving to be a snag for Israeli financial services providers. On an iPhone, Apple’s proprietary Wallet app is the only app with access to the phone’s NFC chip, which forces banks to come to terms with the tech giant in order to reach iPhone customers. Android, on the other hand, offers a more open ecosystem that allows third party apps (including a bank’s own app) to take advantage of the chip.
It’s not yet clear how the talks will play out in Israel, though Apple has steadily worked to extend the reach of Apple Pay in the past few years. The platform had 383 million users as of last March, and has since been made available in Iceland in addition to Bulgaria and Belarus.