Originally Posted by
tmiw
The issue is more that (a) debit routing may be problematic (at least from a UX perspective), potentially forcing all debit transactions over Visa/MC and (b) contactless could very well increase card use for smaller purchases like it has elsewhere. Building retailer specific apps has the possibility of eventually pushing a significant number of transactions off the card rails entirely, significantly lowering costs. And if it doesn't, at least the shift away from cash will have taken longer than it would have otherwise.
Also, when you're of the view that almost any amount is too much to pay for card processing, that 0.15% or so that the issuer pays Apple is effectively the same as if you had paid Apple directly. After all, if the issuers can afford to shell out the money for Apple Pay support, they can afford to reduce processing costs by at least that much.
How does their app save them money? It takes credit cards too, and it advertises no benefit for debit, like discounts. Why would I voluntarily lose ease of use and the benefit of fraud protection to help out Publix by using their sketchy app? At least Target gives me 5% for the privilege, and I mostly shop online with them because of the free shipping. Publix online prices are often higher than in-store, and you still have to pay a delivery fee for in-store pickup.
I assume Publix pays negotiated rates for processing, not the rack rate, like every other large retailer. I doubt Publix could have gotten an additional 0.15% off their rate but for Apple Pay, that's not how real world prices are negotiated. It's as much or more about where they think they can hold the line than it is about costs. If Apple Pay disappeared tomorrow, the likelihood that everybody is going to get a 0.15% rate reduction for free on the next contract renewal is just about zero.