A number of banks are currently pressuring Visa to make changes to the way it processes some payments made via Apple Pay, moves that would reduce the fees the banks pay to Apple for certain transactions, reports The Wall Street Journal.
At the heart of the issue are automatic recurring payments like memberships and streaming services. Visa is aiming to change the way it issues tokens for Apple Pay cards such that Apple would only receive a transaction fee on an initial subscription payment and not on subsequent transactions.
When Apple introduced Apple Pay in 2014, the iPhone had already clobbered music players, cameras and GPS systems. Banks and card networks worried it also would displace card payments.
Banks agreed to pay Apple 0.15% of each purchase made by their credit cardholders. (They pay a separate fee on debit-card transactions.) Those fees account for most of the revenue that Apple makes from its digital wallet, according to people familiar with the matter.
Aside from the fee arrangement, Apple garnered several other concessions from credit card issuers as it rolled out Apple Pay, and in exchange, Apple agreed not to launch its own credit card network to go up against Visa and Mastercard.
With the launch of Apple Card in partnership with Goldman Sachs, Apple has become more of a direct competitor to other banks, and some bank executives have reportedly been angered by Apple's move and are seeking ways to reduce the payments they make to Apple.
Apple has unsurprisingly informed Visa that it objects to the proposed change that would reduce the fees it receives on recurring transactions, so it remains to be seen whether Visa will follow through on its plans, which are scheduled to go into effect next year.
