Apple Pay: No, Not Everyone Wants It

There are two problems with Apple Pay — and both are problematic.
The first is that not everyone has an IOS device, or one that supports it. And not everyone ever will, despite the wet dreams of the entire Dallas Cowboys team blowing Tim Cook nightly that dance in his head.
The second is that the “carrot” Apple Pay tries to offer is claimed to be an “escape” from the fee structure of the interbank system that currently is used by various credit and debit vendors — typically 2-3% of the ticket size.
However, there is an issue with that second “problem” — the belief that these “alternatives” will be materially cheaper all-in, including risk allocation, is unprovedat best.
Remember that cost is not just the discount rate, although that’s certainly a factor (and it’s not just the 2% or 3% charge, it’s also the ticket fee, usually a quarter or fifty cents, that many of these merchant processors charge — for small charges this is ruinously expensive for the merchant.) That ticket charge, by the way, is why you see signs in some stores saying “$10 minimum for credit cards” and similar even though such restrictions are a direct violation of every merchant agreement I’ve seen — and I’ve seen a lot of them.

This post was published at Market-Ticker on 2014-11-01.

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