Google Inc. won’t earn any transaction fees from credit-card issuers for its coming mobile-phone payments service, unlike Apple Inc., because of evolving ground rules for the services.

Credit-card issuers hope the changes pressure Apple to trim or eliminate its fees, say industry executives, highlighting the speed at which the economics are changing in the evolving mobile-payments business.

Google disclosed its payments service, Android Pay, in late May, with wireless providers, payment networks, retailers and banks, stepping up competition with Apple Pay, which launched late last year.

Hundreds of financial institutions scrambled to work with Apple Pay, afraid of being left at a competitive disadvantage. As a result, big banks and other card issuers agreed to give Apple 0.15% of the value of each credit-card transaction. For bank debit cards, Apple collects a half-cent per purchase, according to people familiar with the service.

“This is a bold move on behalf of the banks,” said Rick Oglesby, head of research at Double Diamond Payments Research. After agreeing to Apple’s terms for Apple Pay, “they’re now taking a stand against similar deals. It could easily turn into a standoff.”

Many of Apple’s contracts are for three years, and have roughly two years to go, according to people familiar with the situation.

Wall Street Journal, June 5, 2015
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