Apple Pay is hitting a wall with Australian banks

Apple Pay launched in the United States in October 2014 and expanded to the United Kingdom in July 2015, but Apple is struggling to gain more traction with its mobile payment service. A new report out of Australia may highlight the reason for the worldwide holdup: fees.

The Sydney Morning Herald disclosed that the company is negotiating with at least four of the biggest banks there for a partnership for Apple Pay.

Now the big four on average earn about 50 cents for every $100 worth of transactions.

Apple’s launch of its first Australian dollar bond issue raised $1.2 billion in two hours. In the U.S., Apple reportedly earns around 15¢ for every $100 of transactions, while transaction fees come to about $1 per $100. This rate is about half of what the bank is supposed to have per transaction in Australia, such that the 0.15 percent cut that Apple intends to have is a hard one to accept. The mid-April report claimed that six Canadian banks were in talks with Apple, including the Royal Bank of Canada, TD Canada Trust, Scotiabank, Bank of Montreal, CIBC and the National Bank of Canada. Narev suggests that many Australian banks are far ahead of others in the world when it comes to mobile payments services.

Apple Pay, the tech company’s first venture into mobile payment, hasn’t been able to make significant advances since it was launched in September a year ago. It allows users of an iPhone 6 or Apple Watch to use a tap-and-go terminal to pay for items by holding their fingerprint on the phone or double-tapping the face of the smartwatch.

Firstly, the Reserve Bank of Australia is forcing banks to contribute to the cost of building a real-time payments infrastructure and the banks reportedly don’t want Apple to take advantage of this investment without contributing to the project.

In recent times, a bond sale of AU$700 million by global brewer SABMiller might have encouraged Apple and given it hope that it can diversify its funds by issuing Australian bonds. No. But the disruption is structural. And I don’t think there will ever be a point where me or my successor, or his or her successor, is ever going to sit here and say their war is done and we won.

“But we have got customers, we have got distribution, we have got brand, we have got product”.