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Visa and Mastercard provide entire global payment platforms, yet only (generally?) take a small fee per transaction. Apple seems to do a lot less, but wants ~1

Visa and Mastercard provide entire global payment platforms, yet only (generally?) take a small fee per transaction. Apple seems to do a lot less, but wants ~1/3 of every transaction.

vishnumohandas 2y ago
> Apple seems to do a lot less Not suggesting that this warrants a 30% cut, but unlike payment gateways Apple also provides discoverability and distribution.
- justinclift 2y ago
  > also provides discoverability and distribution. Apple seems to be incredibly poor at discovery, so that's not a point in their favour. Distribution could be done by any number of other CDNs, as will likely be done by the new EU based App stores. What's the bet those won't be charging ~30% transaction fees to cover things? And they won't even have the same scale as Apple. ;)
- tjoff 2y ago
  They lock their users in a walled garden where only they can provide discoverability and distribution.
cenamus 2y ago
But doesn't that have way more to do with (EU) regulation? I thought that they take quite a significant chunk in the US
- justinclift 2y ago
  That a bit unclear. Are you meaning Visa/Mastercard charge less in the EU due to EU regulations? If that's what you're meaning, then I simply don't know as I've not heard that before. :)
  - nottorp 2y ago
    Someone in the food chain does take less in some EU countries. Not all. The commissions are capped by law in some parts, but not others. As a small sample, in RO i think a large store chain pays like 0.5%. The consequence is credit card reward programs are either non existent or something like 0.1% cashback. The other consequence is you can pay by card almost anywhere. On the other hand I've been to NL and small stores simply did not take Visa/MC because it was too expensive for them. Guessing the visa/mc charges weren't capped there.
    - com 2y ago
      They’re all covered by identical regulations. Culturally, though, small retailers may still believe that credit card fees are higher than they actually are. They may be concerned about refund and chargeback processes. Or, their gateway either cannot offer credit cards on their POS terminals for technical or compliance reasons, or the retailer simply hasn’t enabled the payment methods. It’s not regulation in NL that blocks small retailers from taking V or MC.
      - nottorp 2y ago
        High fees is what they told me :) But then I was that weird tourist with a Visa and a MC...
    - ccozan 2y ago
      Not sure if you actually been to RO but every small shop has 3-4 payment terminals, each bank branded, and based on the card they use a different terminal thus ensuring minimal charge or even 0. In DE or NL, you operate via an intermediary ( like payone, etc ) and a single terminal. Maybe here comes the difference. PS. Larger shops/markets ( like kaufland, carrefour, etc ) have also just one, but I guess they negociate the fee.
      - nottorp 2y ago
        > Not sure if you actually been to RO No, I was born and live there. My groceries kiosk has just the single terminal. Where I shop, only Dedeman, Altex and the eMag showroom still ask me what bank is the card from, and they're nowhere near small... Edit: Hmm. Cozy? Small world...
- ffgjgf1 2y ago
  Not really. They still take “only” up to 1-2% in the US
ffgjgf1 2y ago
Steam also takes 30% despite all platforms it operates on being entirely open. So it doesn’t seem to be that unreasonable
- justinclift 2y ago
  Steam reportedly puts in a bunch of effort to earn it though. Whereas Apple's relationship seems more predatory/antagonistic (at best).
  - dagmx 2y ago
    You think Steam puts in more effort than providing graphics APIs, system frameworks for everything from networking to controller handling, UI libraries, educational sessions and security critical updates? Like, one may argue that the 30% isn’t valid (and it’s 15% for the majority of devs) but to say Steam does more is absurd. I’m curious if people who hold this opinion have actually been involved in the process of releasing apps on either platform. And to be clear, I know valve does contribute to gaming on Linux but that’s single digit market share, so is definitely a far cry from the 30%.
    - Fire-Dragon-DoL 2y ago
      I mean, Steam did release the Steam Deck, so yes it provides everything you described. I'm not sure why we are focusing on the 30%, the problem is that facebook, a very rich company, get charged 0.
      - ffgjgf1 2y ago
        Steam Deck is mostly standard Linux (although most stuff Valve does is gets merged into the kernel/free packages etc. so it’s hard to disentangle the these, but not exactly comparable to building a platform almost from scratch) > the problem is that facebook, a very rich company, get charged 0. Just like every other company using the same business model (i.e. ads instead of IAP)?
diatone 2y ago
Apples to oranges. Card networks have more than three stakeholders to work with per transaction, apply fees indiscriminately from milk to digital music subscriptions, and operate at truly staggering volumes.
- justinclift 2y ago
  You're right. Visa and Mastercard seem to do a lot more, yet charge a very small fraction of the amount.
  - vlovich123 2y ago
    Yet Canada has Interac and India has UPI which nationalize all digital transactions while charging even less. In Europe they’re much more heavily regulated and this charge even less than in the States. So if within their own industry Visa and Mastercard overcharge like crazy, especially when they can, what makes you so sure that they’re a good counter example for a completely different industry? Especially when competitors seem to be charging a very similar rate for a similar service? That being said, it is a fair point when you consider that retailers and other similar product middle men tend to charge 1-3%, but it’s important to also consider that Apple position’s itself as a luxury product and brand where 30% markup isn’t actually out of line.
    - diatone 2y ago
      Exactly right. I’m not against competitor analysis here. But let’s at least compare against a basket of structurally similar offerings instead of cherry picking companies whose rake happens to be an order of magnitude lower in percentage terms.
  - diatone 2y ago
    My point, which hasn’t really been addressed, is that “more” isn’t a meaningful term when comparing card networks and software app stores, because the markets are structurally different.
- wiseowise 2y ago
booi 2y ago
> Apple seems to do a lot less, but wants ~1/3 of every transaction. I would bet Apple has put more into R&D for iPhones, iPads and iOS than the entire enterprise value of visa and mastercard put together. If anything, they've worked for it more than visa/mastercard who are merely rails with distribution. Most of the heavy lifting, risk and work in the card ecosystem is done by the issuers (banks et. al.)
- thorncorona 2y ago
  I think you underestimate the difficulty of competing against visa or mastercard. Visa and mastercard are logistical masterpieces. Think of how much legal work needs to be done in order to be compliant in every country in the world.
  - netsharc 2y ago
    Since they're giants, I wonder how much of the compliance is the other way: countries being strong-armed to comply with their terms.
    - lukan 2y ago
      "countries being strong-armed to comply with their terms." I suppose that is just another way of describing "legal work" in this context.
- croes 2y ago
  The high margins of iPhones and iPad gets already already justified with Apple's R&D costs. And it would be morally wrong to put that costs on the app developers, without their apps the store is useless. The lack of apps killed Windows Phone.
- conductr 2y ago
  If desktop pc users saw Microsoft taking a third of every transaction from yourmoms.com to Amazon.com because they did the heavy lifting of popularizing the home pc and web browser usage, I think you’d realize how ridiculous that argument sounds. They built it to sell something else, operating systems and then some ancillary stuff. They became one of the most valuable companies in the world off just that. Just like the iOS was built to sell phones. They make plenty off phones. They’ve made Apple one of the most valuable companies in the world too. Access to an App Store has become a requirement of a modern phone, so they wouldn’t sell many without it. But it doesn’t mean they should be able to tax the entire economy so heavily. Just like how running a browser is a requirement of modern browsers for an operating system, but that doesn’t mean the operating system should be allowed to tax the entire economy of activity that takes place on said operating system.
myspy 2y ago
Only 3% of the 30% go to payment processing. Hence why they still want 27% when developers choose their own payment system. The 27% are seen similar to Sony and Nintendo as fees to be on a platform which has wide reach but also gives tools and does stuff to enable app distribution. Is that too much? I don‘t know but it‘s what all appear to do. The platform politics didn‘t evolve as fast as the tech though. So what about apps like Patreon, Netflix, Spotify, that was never on the table in 2008.
- maccard 2y ago
  The 3% payment charge is the transaction fee, but that doesn’t take into account the actual handling of the rest of the transaction lifecycle, like managing refunds, or chargebacks. A single chargeback will cost you $25 whether it’s successful or not (plus refunding the transaction if you lose), but on google play and co it’s just refunded.
  - Jensson 2y ago
    > but that doesn’t take into account the actual handling of the rest of the transaction lifecycle, like managing refunds, or chargebacks They do, which is why credit cards take that much, cost of chargebacks is a part of the transaction fee.

Visa and Mastercard provide entire global payment platforms, yet only (generally?) take a small fee per transaction. Apple seems to do a lot less, but wants ~1/3 of every transaction.

vishnumohandas 2y ago

> Apple seems to do a lot less Not suggesting that this warrants a 30% cut, but unlike payment gateways Apple also provides discoverability and distribution.

justinclift 2y ago
> also provides discoverability and distribution. Apple seems to be incredibly poor at discovery, so that's not a point in their favour. Distribution could be done by any number of other CDNs, as will likely be done by the new EU based App stores. What's the bet those won't be charging ~30% transaction fees to cover things? And they won't even have the same scale as Apple. ;)
tjoff 2y ago
They lock their users in a walled garden where only they can provide discoverability and distribution.

cenamus 2y ago

But doesn't that have way more to do with (EU) regulation? I thought that they take quite a significant chunk in the US

justinclift 2y ago
That a bit unclear. Are you meaning Visa/Mastercard charge less in the EU due to EU regulations? If that's what you're meaning, then I simply don't know as I've not heard that before. :)
- nottorp 2y ago
  Someone in the food chain does take less in some EU countries. Not all. The commissions are capped by law in some parts, but not others. As a small sample, in RO i think a large store chain pays like 0.5%. The consequence is credit card reward programs are either non existent or something like 0.1% cashback. The other consequence is you can pay by card almost anywhere. On the other hand I've been to NL and small stores simply did not take Visa/MC because it was too expensive for them. Guessing the visa/mc charges weren't capped there.
  - com 2y ago
    They’re all covered by identical regulations. Culturally, though, small retailers may still believe that credit card fees are higher than they actually are. They may be concerned about refund and chargeback processes. Or, their gateway either cannot offer credit cards on their POS terminals for technical or compliance reasons, or the retailer simply hasn’t enabled the payment methods. It’s not regulation in NL that blocks small retailers from taking V or MC.
    - nottorp 2y ago
      High fees is what they told me :) But then I was that weird tourist with a Visa and a MC...
  - ccozan 2y ago
    Not sure if you actually been to RO but every small shop has 3-4 payment terminals, each bank branded, and based on the card they use a different terminal thus ensuring minimal charge or even 0. In DE or NL, you operate via an intermediary ( like payone, etc ) and a single terminal. Maybe here comes the difference. PS. Larger shops/markets ( like kaufland, carrefour, etc ) have also just one, but I guess they negociate the fee.
    - nottorp 2y ago
      > Not sure if you actually been to RO No, I was born and live there. My groceries kiosk has just the single terminal. Where I shop, only Dedeman, Altex and the eMag showroom still ask me what bank is the card from, and they're nowhere near small... Edit: Hmm. Cozy? Small world...
ffgjgf1 2y ago
Not really. They still take “only” up to 1-2% in the US

ffgjgf1 2y ago

Steam also takes 30% despite all platforms it operates on being entirely open. So it doesn’t seem to be that unreasonable

justinclift 2y ago
Steam reportedly puts in a bunch of effort to earn it though. Whereas Apple's relationship seems more predatory/antagonistic (at best).
- dagmx 2y ago
  You think Steam puts in more effort than providing graphics APIs, system frameworks for everything from networking to controller handling, UI libraries, educational sessions and security critical updates? Like, one may argue that the 30% isn’t valid (and it’s 15% for the majority of devs) but to say Steam does more is absurd. I’m curious if people who hold this opinion have actually been involved in the process of releasing apps on either platform. And to be clear, I know valve does contribute to gaming on Linux but that’s single digit market share, so is definitely a far cry from the 30%.
  - Fire-Dragon-DoL 2y ago
    I mean, Steam did release the Steam Deck, so yes it provides everything you described. I'm not sure why we are focusing on the 30%, the problem is that facebook, a very rich company, get charged 0.
    - ffgjgf1 2y ago
      Steam Deck is mostly standard Linux (although most stuff Valve does is gets merged into the kernel/free packages etc. so it’s hard to disentangle the these, but not exactly comparable to building a platform almost from scratch) > the problem is that facebook, a very rich company, get charged 0. Just like every other company using the same business model (i.e. ads instead of IAP)?

diatone 2y ago

Apples to oranges. Card networks have more than three stakeholders to work with per transaction, apply fees indiscriminately from milk to digital music subscriptions, and operate at truly staggering volumes.

justinclift 2y ago
You're right. Visa and Mastercard seem to do a lot more, yet charge a very small fraction of the amount.
- vlovich123 2y ago
  Yet Canada has Interac and India has UPI which nationalize all digital transactions while charging even less. In Europe they’re much more heavily regulated and this charge even less than in the States. So if within their own industry Visa and Mastercard overcharge like crazy, especially when they can, what makes you so sure that they’re a good counter example for a completely different industry? Especially when competitors seem to be charging a very similar rate for a similar service? That being said, it is a fair point when you consider that retailers and other similar product middle men tend to charge 1-3%, but it’s important to also consider that Apple position’s itself as a luxury product and brand where 30% markup isn’t actually out of line.
  - diatone 2y ago
    Exactly right. I’m not against competitor analysis here. But let’s at least compare against a basket of structurally similar offerings instead of cherry picking companies whose rake happens to be an order of magnitude lower in percentage terms.
- diatone 2y ago
  My point, which hasn’t really been addressed, is that “more” isn’t a meaningful term when comparing card networks and software app stores, because the markets are structurally different.
wiseowise 2y ago

booi 2y ago

> Apple seems to do a lot less, but wants ~1/3 of every transaction. I would bet Apple has put more into R&D for iPhones, iPads and iOS than the entire enterprise value of visa and mastercard put together. If anything, they've worked for it more than visa/mastercard who are merely rails with distribution. Most of the heavy lifting, risk and work in the card ecosystem is done by the issuers (banks et. al.)

thorncorona 2y ago
I think you underestimate the difficulty of competing against visa or mastercard. Visa and mastercard are logistical masterpieces. Think of how much legal work needs to be done in order to be compliant in every country in the world.
- netsharc 2y ago
  Since they're giants, I wonder how much of the compliance is the other way: countries being strong-armed to comply with their terms.
  - lukan 2y ago
    "countries being strong-armed to comply with their terms." I suppose that is just another way of describing "legal work" in this context.
croes 2y ago
The high margins of iPhones and iPad gets already already justified with Apple's R&D costs. And it would be morally wrong to put that costs on the app developers, without their apps the store is useless. The lack of apps killed Windows Phone.
conductr 2y ago
If desktop pc users saw Microsoft taking a third of every transaction from yourmoms.com to Amazon.com because they did the heavy lifting of popularizing the home pc and web browser usage, I think you’d realize how ridiculous that argument sounds. They built it to sell something else, operating systems and then some ancillary stuff. They became one of the most valuable companies in the world off just that. Just like the iOS was built to sell phones. They make plenty off phones. They’ve made Apple one of the most valuable companies in the world too. Access to an App Store has become a requirement of a modern phone, so they wouldn’t sell many without it. But it doesn’t mean they should be able to tax the entire economy so heavily. Just like how running a browser is a requirement of modern browsers for an operating system, but that doesn’t mean the operating system should be allowed to tax the entire economy of activity that takes place on said operating system.

myspy 2y ago

Only 3% of the 30% go to payment processing. Hence why they still want 27% when developers choose their own payment system. The 27% are seen similar to Sony and Nintendo as fees to be on a platform which has wide reach but also gives tools and does stuff to enable app distribution. Is that too much? I don‘t know but it‘s what all appear to do. The platform politics didn‘t evolve as fast as the tech though. So what about apps like Patreon, Netflix, Spotify, that was never on the table in 2008.

maccard 2y ago
The 3% payment charge is the transaction fee, but that doesn’t take into account the actual handling of the rest of the transaction lifecycle, like managing refunds, or chargebacks. A single chargeback will cost you $25 whether it’s successful or not (plus refunding the transaction if you lose), but on google play and co it’s just refunded.
- Jensson 2y ago
  > but that doesn’t take into account the actual handling of the rest of the transaction lifecycle, like managing refunds, or chargebacks They do, which is why credit cards take that much, cost of chargebacks is a part of the transaction fee.