Apple Pay is finally available in India, but its first rollout has come with a notable gap. While Axis Bank has joined the service with eligible Visa and Mastercard credit cards, some of India’s biggest card issuers, including HDFC Bank, SBI Card and ICICI Bank, are not part of the initial launch.
The reason appears to go beyond technical integration. At the heart of the delay is a question of money: does Apple Pay bring enough additional spending to justify banks sharing part of their transaction revenue with Apple?
Apple Pay’s India launch starts with Axis Bank
Apple Pay launched in India on September 30 with support for eligible Axis Bank-issued Visa and Mastercard credit cards. Apple has said that the delay in bringing other banks on board is linked to technical readiness, but reports indicate that commercial negotiations have also played a role.
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According to Moneycontrol, Apple has been seeking a commission of about 20 basis points, or 0.20%, on transactions made through Apple Pay. Large card issuers, meanwhile, have reportedly been willing to offer around 15 basis points, or 0.15%.
That difference may look small on an individual transaction. For banks handling millions of card payments, however, even a fraction of a percentage point can affect the economics of the business.
Why banks are questioning Apple’s fee
Apple’s pitch is straightforward. Apple Pay makes card payments easier for iPhone users by placing their cards inside Apple Wallet. The company also argues that a smoother payment experience could encourage customers to use their credit cards more often, including for purchases that might otherwise have been made through UPI.
For banks, higher card usage can mean more transaction-related revenue. But the bigger question is whether Apple Pay will actually create new spending or simply change the way an existing card transaction is completed.
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A customer who already owns a credit card can use it online, save it with a shopping platform or add it to other payment apps that support cards. In many cases, the transaction could happen even without Apple Pay. That makes it difficult for banks to calculate how much additional business Apple Pay would generate.
India’s credit card market works differently
The calculation becomes more complicated because Indian credit card users often choose cards based on rewards, cashback and merchant offers. For example, a customer shopping during a major online sale may select a particular card because it offers an instant discount. The fact that another card is already stored in Apple Wallet may not be enough to change that decision.
This weakens the argument that simply putting a card inside Apple Wallet will automatically increase its share of a customer’s spending. Indian banks also already have direct relationships with their cardholders. UPI apps and other digital payment platforms provide additional ways for banks to remain connected with customers. Apple Pay therefore has to show that it can offer something beyond convenience.
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MDR has become more important for card issuers
The economics of the credit card business are also changing. Banks traditionally earn money from customers who carry a balance and pay interest on their outstanding credit. But more customers are now paying their monthly bills in full, reducing the contribution from revolving credit.
This puts greater importance on transaction revenue, including the Merchant Discount Rate, or MDR. MDR is the fee paid by a merchant when a card transaction is processed. According to Moneycontrol, issuing banks receive around 80% of the MDR because they take on the credit risk associated with the card.
As a result, giving Apple a portion of the transaction value becomes harder to justify if the transaction would have taken place anyway. For a bank, the question is therefore not simply whether Apple Pay works. It is whether Apple Pay generates enough additional card spending to compensate for the share of revenue paid to Apple.
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Apple Pay does not support UPI in India
There is another important difference between Apple Pay and the payment ecosystem Indian consumers already use. Apple Pay currently does not support UPI in India. This means its initial role is centred on cards rather than the country’s dominant digital payment system.
That could limit its appeal to consumers who rely heavily on UPI for everyday payments. At the same time, Apple Pay gives iPhone users a dedicated wallet for eligible Visa and Mastercard cards, including contactless payments. For Apple, the challenge is to convince banks that this experience will lead to more card spending rather than simply move existing card transactions into Apple’s wallet.
Indrani Priyadarshini is a journalist and editorial professional specialising in technology, artificial intelligence, smart cities, green energy, and digital transformation. With over four years of experience in tech journalism and digital media, she is known for turning complex industry developments into clear, engaging, and insightful stories. Her expertise spans reporting, editorial strategy, digital publishing workflows, and in-depth coverage of emerging technologies shaping the future.
