Apple Pay is one of the top mobile payment and digital wallet services used today. And it's not difficult to see why:
- Apple has a huge and famously loyal following of fans. With more than 800 million paying iTunes subscribers, the company has momentum on its side.
- Apple Pay leverages industry-leading security technology, including near-field communication (NFC), biometrics and tokenization.
- Before launching its new payment technology, Apple secured agreements with more than 220,000 merchants — including big names like McDonald's, Staples, Whole Foods and Subway.
Given these assets, it's easy to understand why retailers are flocking to Apple Pay in droves.
But as a smaller merchant, does it make sense to adopt Apple's payment technology? How much will it cost you to implement Apple Pay at your business?
A Breakdown of Apple Pay Implementation Costs
The biggest single cost is the NFC contactless payment terminal that you must purchase. With this newer type of reader, customers can complete transactions at the point of sale without having to physically insert a credit or debit card.
Prices for NFC terminals range from $300 to $500. If using a smartphone or tablet to accept payments, you can pick up an NFC reader for about $100 or less. And depending on the type of reader, you may also need to invest in additional software upgrades.
You also need to think about employee training. Your staff must understand how to properly use NFC contactless readers to process payments. The training should also include refunds, chargebacks and cancellations. This cost (measured in employee hours) can vary, depending on the size of your staff.
Altogether, you might end up spending anywhere from $1,000 to $2,000 after factoring in hardware, software and wages.
As a smaller retailer, these expenses may seem daunting. Does it really make sense to invest limited resources so your store can begin accepting the “hottest” and “newest” technology out there?
Is Apple Pay Worth the Investment?
Ultimately, it is a personal decision — one that will vary from merchant to merchant. But there’s a reason why more than 2 million store locations accept Apple Pay: Apple Pay fees are lower for merchants.
Credit card swipe fees in the U.S. are notoriously high — ranging from 1.5 percent to 5 percent. In fact, American merchants pay out over $50 billion every year (which is more than the rest of the world combined). Card issuers use a portion of these fees to boost security and fund reward programs.
When setting up its payment system, Apple managed to reduce these fees by as much as 10 percent. It was able to do this for two reasons:
1. Competing Mobile Wallets
Apple Pay is not the only mobile payment technology available. Worried that they'll be cut out of future transactions, credit card issuers agreed to reduce their fees for Apple Pay — with the expectation that they’ll make more profits through higher volume.
2. Reduced Security Costs
Because Apple Pay for business is highly secure, credit card issuers don't have to invest as much in their own security infrastructure. Apple has essentially taken on some of the responsibility. This allowed card issuers to reduce their swiping fees even more.
Does Accepting Apple Pay Make Sense for Your Business?
A 10 percent reduction in credit card fees may not seem like a lot. But if this tiny decrease can save you $1,000 annually, then accepting Apple Pay will pay for itself in the first year alone.
And don’t forget that many EMV credit card terminals come with NFC capabilities. In 2015, there was a liability shift on fraudulent transactions for retailers who choose to upgrade their POS systems and terminals to accept chip and PIN transactions. So, chances are you already updated your payment infrastructure or you will anyway — whether you choose to use Apple Pay or not.