Canadian banks find Apple Pay’s terms ‘onerous’

April 17, 2015, 7:30 PM UTC
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IMAGE DISTRIBUTED FOR MASTERCARD - MasterCard demonstrates Apple Pay at the launch of MasterCard's NYC Tech Hub on Monday, Oct. 20, 2014 in New York. (Photo by Charles Sykes/Invision for MasterCard/AP Images)
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Bringing Apple’s friction-free payment system to Canada would seem like a slam dunk. iPhone penetration is relatively high in the Great White North and the vast majority of Canadian merchants have upgraded to Apple Pay-ready contactless kiosks and card readers.

But the six banks that control 90% of Canada’s retail bank accounts are balking, according to the Wall Street Journal.

“Canadian banks are aware of the strong interest in Apple Pay in Canada and want to be seen as offering consumers what could be a game-changer in mobile payments,” write Rita Trichur and Daisuke Wakabayashi in Friday’s paper.

However, Canadian banks are concerned, in part, about what they consider ‘onerous’ terms of commercial agreements for Apple Pay, according to people familiar with the matter. It is also possible that Canadian banks could face higher costs than their U.S. counterparts, some of those people said. A base case for Canadian banks could be in the range of 15 to 25 basis points on credit card transactions to Apple, according to one of those people.”

In the U.S., according to the Journal, Apple charges 15 basis points per credit card transaction and half-a-cent per debit transaction on Apple Pay.

The other concern expressed by the Journal’s sources — what the paper describes as the “growing incidence of fraud on Apple Pay” — is a red herring. In the U.S., it’s the banks that are getting hacked, not Apple’s devices.

To develop better security protocols, Canada’s “big six” banks have reportedly formed a consortium and hired consultants.

The big 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.

Follow Philip Elmer-DeWitt on Twitter at @philiped. Read his Apple (AAPL) coverage at or subscribe via his RSS feed.

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