N26 and Lydia announce Apple Pay support in France, but major banks are still missing

Apple Pay hasn’t really been a major success in France so far. France’s biggest banks still don’t plan to support Apple’s payment service. But two companies announced today that they were going to add Apple Pay support before the end of the year — Lydia and N26. Crédit Mutuel Arkea’s banks also recently announced that they were working on that feature as well.

Lydia is a peer-to-peer payment app that lets you send money to your friends and family in no time. Think about it as a sort of Venmo or Square Cash for France and other European countries. The company launched physical cards last year. It lets you spend your Lydia balance in stores that support MasterCard. And soon, you’ll be able to add this card to your Apple Pay wallet.

N26 is a German fintech startup that is creating a bank from the ground up. In addition to the French market, the company already announced Apple Pay support for Italy and Spain a few weeks ago.

Crédit Mutuel Arkea operates various banks under the Crédit Mutel brand, as well as Fortuneo, Arkea and an upcoming bank for young people called Max. Orange Bank and Banque BCP are also adding Apple Pay later this year.

Only two banks currently support Apple Pay in France, Caisse d’Épargne/Banque Populaire (it’s the same company) and Carrefour Banque. You can also add cards from various wallets, such as Orange Cash, Ticket Restaurant and Boon. But those aren’t true bank accounts.

Most big names are still missing, such as BNP Paribas, Société Général, Crédit Agricole, La Banque Postale, their respective digital banks, etc. Comparatively, a ton of banks partner with Apple in the U.K. Starling Bank just added Apple Pay support today.

There are a couple of reasons why those banks are still holding out on adding Apple Pay support. First, there have been multiple reports that banks don’t want to pay Apple’s fee.

France is a weird market as the vast majority of the population use debit cards for everything. These debit cards are a bit more powerful than your average debit card as you can use them for security deposits without giving money and getting it back later. And banks also support interest-free overdrafts for small amounts.

Apple asks its financial partners to share a portion of the interchange fee with them. But the interchange fee tends to be lower for debit card transactions compared to credit card transactions. That’s why Apple’s fee has been a point of contention.

Second, major French banks have been working on an alternative called Paylib. While this solution sounds great on paper, I’ve tried using it and it was a complicated mess. Some of the banks behind Paylib have already given up and added Apple Pay support anyway (Caisse d’Épargne/Banque Populaire and soon Crédit Mutuel Arkea).

Maybe other big banks are going to change their mind now that Crédit Mutuel Arkea is adding Apple Pay support. But customers aren’t really asking for Apple Pay support as contactless cards already work well. If it’s a small transaction, you can just tap your card on the terminal. So Apple Pay seems stuck in a chicken-and-egg situation for the time being.