Apple Pay India Launch: Why HDFC Bank, ICICI Bank And SBI Card Are Still Holding Back

Apple Pay has launched in India, but the iPhone maker's payments platform has entered the market with only one banking partner so far. HDFC Bank, ICICI Bank and SBI Card, three of the country's major credit-card issuers, are yet to support the service.

The platform went live in India on September 30, initially allowing customers with eligible Axis Bank Visa and Mastercard credit cards to add their cards to Apple Wallet. It can be used for payments in stores, apps and on websites.

The limited rollout comes as the iPhone maker enters a payments market where UPI has become the dominant digital payment method. Unlike UPI, the India offering is card-based and requires individual banks to integrate their credit cards with the platform.

The absence of some of India's biggest card issuers has been linked to commercial negotiations between the company and banks. Earlier reports said Apple was seeking a fee of around 20 basis points on transactions, while larger banks were looking to offer around 15 basis points.

Why HDFC Bank, ICICI Bank And SBI Card Are Holding Back

The key issue in discussions between the technology company and major Indian card issuers has been the economics of transactions made through the platform.

Apple's model involves taking a share of the transaction value from the card-issuing bank. Reports earlier this year said the company was seeking around 20 basis points per transaction, while some large banks were willing to share around 15 basis points. The difference becomes important for banks because the fee would apply to transactions made through their cards.

The negotiations have not resulted in support from HDFC Bank, ICICI Bank or SBI Card at launch. The banks have not publicly disclosed their commercial discussions with the iPhone maker, so the reported fee negotiations are based on reports citing sources familiar with the talks rather than an official explanation from the banks.

The technology and payment infrastructure required for the service are otherwise in place. The platform uses tokenisation, with a device-specific number used instead of the actual card number during transactions.

Apple Pay India Rollout Remains Limited

The initial service supports Visa and Mastercard credit cards issued by Axis Bank, while RuPay cards are not supported at launch. The service also does not currently provide a UPI-based payment option in India.

The company has been working with payment and merchant infrastructure firms to build acceptance for the platform. The service can be used at participating contactless terminals as well as for payments within supported apps and on websites.

The limited bank coverage means the initial card base available to the service is narrower than it would be with the country's largest issuers onboard. HDFC Bank, ICICI Bank and SBI Card together account for a substantial share of India's credit-card spending, making their participation important to the platform's expansion in the country.

The iPhone maker's India launch currently rests on Axis Bank, which became the first Indian bank to offer the service to eligible Visa and Mastercard credit-card customers. The company said the platform is now available in more than 90 countries and regions and works with more than 11,000 bank and network partners globally.

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