Chinese banks are to pay half the fees levied by Apple on US banks for the privilege of leveraging Apple Pay, as the consumer electronic giant bids to build market share in the country's competitive mobile payments market.
The deal with Chinese banks will see Apple get around 0.07% per transaction, according to a report on Chinese site Caixin, compared to the approximately 0.15 percent it’s charging banks for credit card purchases in the US.
The fees levied by Apple on merchant interchange revenue have been a stumbling block for the company as it bids to enter new markets. Efforts to enter the Canadian and Australian markets have stalled, as bank resist the company's revenue sharing demands.
Similar arguments delayed its entry to China, according to Caixan, with the company eventually relenting in a compromise agreement forged with the initial 19 launch banks, who will also see a two-year moratorium on payouts to Apple.
States the journal: "Apple started negotiating with major Chinese banks and UnionPay over profit-sharing and technical issues in 2014. The talks stalled, apparently because Chinese banks argued the charges were too steep."
As it bids to take on local tech giants Alibaba and Tencent, Apple Pay has got off to a roaring start, signing up 40 million users on day one.
According to estimates from analysts at Crone Consulting, Apple Pay scored the firm $15 million in revenue in its first year in the US, with the figure projected to top $1 billion annually in five years if ad revenue is factored in.