Apple Pay Credit Cards
Canadian bankers are balking at initial negotiations with Apple to bring Apple Pay to Canada. According to The Wall Street Journal, the six banks that control 90 percent of the Canadian markets consider Apple's terms "onerous," are concerned about security, and have formed a consortium to develop security protocols for Apple's system.
Apple launched Apple Pay in the U.S. in October of 2014, and it quickly became the top mobile payment system in that market. Apple claimed the service accounted for $2 of every $3 spent through mobile transactions in January.
That makes it a hit, and The Wall Street Journal noted that Canada's banks understand this. They also know their customers are keen on the system—Apple's iPhone owns some 30 percent of the market in Canada, which is one reason Apple is targeting that country for early expansion of Apple Pay.
But, and there's always a but, Apple is reportedly looking for 15-25 basis points per transactions from Canadian banks. That's 0.15 percent to 0.25 percent. That might sound small, but U.S. banks are paying up to 15 basis points—the potential for even higher terms than their U.S. counterparts are paying is why Canadian bankers consider the terms to be onerous.
There's no indication as to why Apple might be seeking different terms in Canada.
Another area of concern is security. No one has breached Apple Pay to date, but there have been instances of criminals loading stolen credit information onto Apple Pay and then using it to make purchases. This is possible, in part, because the data was stolen in the first place, but it's also the responsibility of the banks to confirm credit card user identity when it's being added to Apple Pay.
That's why Canadian banks are leery of the security side of Apple Pay—they'll be on the hook for fraud stemming from any lapse in such confirmation. It's also why they've formed a coalition. It's ostensibly to help develop better security protocols, but it has the side effect of making it easier for them to provide a unified front to Apple and maybe extract concessions.
Those six banks—Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce, and National Bank of Canada—control some 90 percent of the Canadian market, making them key to an Apple Pay rollout in that country.
The Journal also reported that Apple is looking for a November rollout for that market.