Apple Pay charges 0.15% and the credit cards 2 to 3%. If the costs were really revealed to the consumers, I wonder how many of them will opt for the convenience versus entering a PIN with a debit card, use a check or pay cash.
But yeah, it's a stupid way to run a payments system.
You would think Starbucks would give you a free cup or something if you filled up your Starbucks stored-value card by EFT instead of credit card. (You would also think Starbucks wouldn't make me accept the wifi TOS every goddamn day, when they have an app/loyalty card relationship with me.)
You would also think that maybe Apple is leaving their options open in the future to 1) link up with retailers' loyalty programs and 2) help retailers bypass Mastercard and Visa and share in the savings.
This actually makes it worse, since the people who pay with cash are typically poor and homeless who cannot get a credit card, yet the richer folks with rewards cards get cashback while they don't.
Edit: Downvotes why?
The reward level is set by the card issuer and the merchant pays that, too, as part of the interchange fee.
In Australia legislation was passed that enabled merchants to add a surcharge for credit card use. The result was that 'rewards' disappeared from the market.
This is like how people are made to think a new flagship smartphone from AT&T costs them $199.
On the merchant end of things, accepting card payments reduces their exposure to risk from theft (both internal and gun-in-your face type). For the big guys, the fee is in the low 1%.
But you're right about the lack of transparency. If card fees were required to be itemized separately, the whole dynamic would shift dramatically. But as far as Apple Pay and similar systems are concerned, the 0.15% is bitten off the banks' fee already, and the price of the transaction isn't based on cost, but on value. As a thought experiment, imagine if Apple stopped taking a 30% cut of app store purchases. Do you think that $0.99 games would be priced at $0.69? Probably not. I think the same is probably true of merchant fees--that they're not going to--on average-- increase by 0.15%.
We'll know for sure in the next several years though.
Now, imagine a poor or homeless person with bad credit that pays in cash, debit or non-rewards credit card. That person is paying more for the same things compared to you at the store and gets none of those perks.
>As a thought experiment, imagine if Apple stopped taking a 30% cut of app store purchases. Do you think that $0.99 games would be priced at $0.69? Probably not.
Even if not, the developer has 30% more to spend on developing the app, resulting in more and better apps. Apple, meanwhile, is buying back stock and giving dividends with all the extra cash because they don't know what to do with it.
Employees skimming off the till?