Apple charges the banks and credit card issuers a fee every time Apple Pay is used, rather than charging the company receiving the money.

How do you know that Apple receives a fee for the transaction? I'd be curious to see a source.

Yup exactly. What is the incentive here for the banks to allow Apple to tokenize CC numbers, AND pay Apple for it? Some kind of risk/liability reduction?

The card issuers need to sign off on it for the liability purposes.

Apple needs the networks and/or the banks to tokenize the CC numbers at the time the card is imported into the wallet.

When the payment is processed, that same network/bank takes the token provided, translates it back to a card number and passes the card number to the issuing bank.

I think it's actually quite a feat that Apple managed to tokenize all 800 million existing card numbers, because of this requirement.

And, apparently, at "card present" transaction rates, which I imagine took some degree of negotiation on Apple's part.

http://bankinnovation.net/2014/09/apple-said-to-negotiate-de...