Why Apple Pay's launch in India has been delayed
What's the story
Apple's plans to launch its payment service, Apple Pay, in India have hit a snag over commission negotiations with major banks, Moneycontrol has reported. The tech giant is reportedly seeking a 20 basis points (bps) per transaction fee, but larger banks are only willing to offer 15bps. This mirrors Apple's commission structure in the United States.
Discussions
Technology ready for launch
The negotiations have been stalled on commercial terms, even though the technology and infrastructure are ready for launch. The delay is primarily due to discussions with major credit card issuing banks such as HDFC Bank, SBI Cards, ICICI Bank, Axis Bank, and Kotak Mahindra Bank. While smaller banks have agreed to Apple's higher commission demands, HDFC and ICICI remain firm on their stance.
Compliance agreement
Compliance with RBI's data localization mandate
A major hurdle for Apple's entry into the Indian market was the Reserve Bank of India's (RBI) data localization mandate. The company has now agreed to undergo mandatory annual system audit reports (SAR) as part of this requirement. However, Apple plans to keep tokenized payment data on-device and with card networks instead of mirroring it on local servers in India, unlike its operations in the US, Denmark and China.
Launch delay
History of Apple Pay in India
Apple's initial plans to launch Apple Pay in India were made three years ago but regulatory approval was not granted at that time. The company was also reluctant to launch due to India's two-factor authentication requirement for credit cards, which it found cumbersome compared to its seamless user experience promise. With biometric authentication now approved by regulators, Apple aims to make Apple Pay as seamless in India as it is in Western markets.