New Delhi: Apple in India unveils Apple Pay; tech giant’s mobile payment service has been delayed as the large banks bargain hard over the payment commissions. Apple Pay has been preparing for the unveiling after the Reserve Bank of India (RBI) upgraded its additional factor authentication guidelines late last year, enabling biometric authorization for card payments.
However, the negotiations with the credit card issuing banks have been stuck on the commercials, while the technology and infrastructure are ready to allow the unveiling the next day.
The company is now asking for 20 basis points per transaction, but the larger banks are now willing to share only 15 bps, similar to the iPhone maker’s global commission structure in the US.
Apple is also asking for the higher share from Indian banks, its premium play in India, where Android holds sway with close to 90% market share. It is in talks with the largest credit card issuers in India such as HDFC Bank, SBI Cards, ICICI Bank, Axis Bank and Kotak Mahindra Bank.
Apple wants to unveil its payment product with the largest credit card issuing banks, hence the delay. Apple’s entry was the RBI’s data localization mandate, which required the company to undergo mandatory annual system audit reports.
Apple has also believed that it did not need to undergo SAR, as it does not store the payment data. It will keep tokenized payment data on-device with the card networks to meet RBI norms. Visa, Mastercard and Amex have also complied with the RBI data localization rule. Apple has also been in talks with the card network firms to allow card tokenization for Apple Pay in India.
Apple backs up tokenized payment data in its local servers in the US, Denmark and China. Apple will not be mirroring the data for India to comply with the RBI’s mandate. Apple does not have a local data center in India, and it is not likely to have one in the near future.
Hence, the call to not mirror the tokenized payments data. Apple did not get regulatory approval for the product. Apple was also not keen on the unveil, as India required two-factor authentication for credit cards. It thought the OTP process to be clunky and cumbersome, taking away from the smooth experience that Apple claimed to its users.
Apple didn’t want to unveil with UPI due to its zero Merchant Discount Rate framework. Users in India mostly rely on UPI to pay for iCloud subscriptions and other Apple services. With the regulatory approval for biometric authentication via Face ID, Apple Pay in India should be as seamless as in the West.
