MADISON, Wis. (9/11/14)--In light of Apple's announcement of its new mobile payment system--Apple Pay--CO-OP Financial Services and Fiserv are working to ensure credit unions are part of that payment environment.
"As a processor, CO-OP Financial Services is in active negotiations with Visa and MasterCard to bring the lowest aggregated issuer fees to our credit unions," said Stan Hollen, president/CEO, CO-OP Financial Services, Rancho Cucamonga, Calif.
"We're bullish on cards, so we think that staying aligned with those networks is the right wallet strategy. Further, a transaction with interchange is better than one with none," he said. "Given our role in a card-based payments system, we think CO-OP has the most leverage on the transaction fees, and that's where we are focusing our efforts. Visa and MasterCard will set interchange rates for tokenized transactions."
Hollen said, "It appears Apple has negotiated to receive card present-equivalent interchange in recognition of the lower fraud costs that we expect tokenization to deliver. CO-OP is working with the networks to make certain that credit union cards aren't disadvantaged vs. big banks within an Apple wallet. This is part of a broader strategy on tokenization that we are re-shaping as facts become available to us."
Apple Pay uses tokenization as a security measure.
Brookfield, Wis.-based Fiserv announced Wednesday that all Fiserv-processed debit and credit issuers have tokenization capabilities available to them through the Visa Token Service and MasterCard Digital Enablement Service.
Fiserv also will enable its Accel debit-processing network to support tokenization.
"Fiserv is equipping our clients to meet growing consumer demand for payments from their mobile device, whether they are paying a bill, paying another person or making a purchase," said Kevin Gregoire, president, Fiserv Financial Institutions Group. "Our partnerships with Visa and MasterCard to support tokenization, and our planned support of tokenization through our own Accel network, are part of our overall commitment to bringing secure and simple digital payment solutions to our clients and their customers."
According to Bank Innovation, Apple reportedly negotiated with American Express, JP Morgan Chase, Citigroup, Capital One and Bank of America to reduce fees for card-present transactions (Sept. 4).
Apple Pay supports credit and debit cards from the three major payment networks--American Express, MasterCard and Visa--that are issued by banks such as Bank of America, Capital One Bank, Chase, Citi and Wells Fargo, which represent 83% of credit card purchase volume in the United States (News Now Sept. 10). Navy FCU, Vienna, Va., with $58 billion in assets, is one of the 11 financial institutions Apple will include in the Apple Pay launch.