09/09/14 – Apple comes out with Apple Pay.I have to qualify my comments here by noting that I’m not much of a believer in Apple products since Steve Jobs died. In fact, Apple let Android take 82% of the world market while it clung to it’s vertically integrated model. It still cherishes that ancient model while the likes of Xiaomi, Huawei, ZTE and Lenovo gain some serious mobile real estate against Apple. At some point Apple’s Wow factor just ebbs away. I’d like an actor to play Tim Cook in the next production.
So why is it taking so long for Mobile Payment to work and will Apple Pay change things. Google Wallet was out a couple of years ago. Pretty much a flop. I even bought an NFC Google phone to use the Wallet, but it came with specific credit card choices and only certain available retailers, so much so, that it eventually left me bored. And we all know that boring technology is the kiss of death, so what has Apple done differently?.
I do believe ApplePay will be a winner because they’ve done a bunch of things differently. At Payyus here we’ve had to deal with every issue that Apple has so handily dealt with in their latest release.There’s the technology, the security, the legacy equipment, the 40+ year old credit card present rules, the customer, the merchant, the issuing bankcard rules, the rewards….the list goes on and on. Apple has surprisingly dealt with these issues and that’s why Apple Pay will be a winner, at least in the US. Much of the world operates differently and it will take years for Apple to get Pay into other countries if ever, but this is a new cool app for the US market.
Apple Pay will be immediately embraced by wealthy US customers and strong US companies that will pay to change their Point of Sale equipment to handle those customers.Of course we see Payyus as the better solution for Small to Medium sized business.Payyus has built-in customer loyalty while Apple Pay does not. Payyus is brandable for any merchant, usable with any card, and good with any phone. And we see Payyus as the ultimate Enterprise solution to escape high credit card fees.
At Payyus we develop our mobile payment technology using an Optical Scanning method to move credit/debit card funds, so it is always a little surprising to see company after company fall toward NFC.After all Starbucks has been wildly successfully using optical mobile payment technology for over 2 years.14 million of their customers have downloaded this app.The industry seems to be trying to fit the service to all the existing players who have their hands on the bank account of merchants all over the world.Let me spec out the ways I see Apple Pay as their biggest winner since the passing of Steve Jobs qualified with a few thoughts:
- Apple Pay uses Near Field Communication. I don’t get very excited by NFC. I just think it can be picked off by unscrupulous nearby listening devices, but maybe there is a way to shield this from prying devices
- There is no PIN, but it uses a fingerprint scan to move the funds. In the demo I did see the user have to try the fingerprint scanner a number of times. This could be a frustrating issue, but solvable issue.
- AmExpress, Visa & MC are on board and they all already use Near Field Communication. Google Wallet is based on NFC, but the carriers wouldn’t sell Google’s NFC phones so that’s why it flopped. Apple doesn’t have that problem, because Apple sells the phones and the software and what carrier wouldn’t carry Apple?
- The credit card info is stored at the iTunes store (only downside–a central place to hack??) They have almost a billion card numbers on file. Yum, yum to a hacker.
- The user can take a picture of the credit card and load it into the itunes store. No need to type in the card number. This sounds simple enough, but if I only have to type it in once, who cares?
- ApplePay IS a card present transaction which offers the lowest available pricing to merchants and makes it easier for them to embrace Apple Pay and it’s expensive NFC equipment
- Each Apple Pay transaction will have a unique identifying number, and use a dynamic security code. A credit or debit card number won’t be stored on the phone. Even if it was stored on the phone it’s a ton more secure than a plastic card in a wallet. Plus it’s easily encrypted. That’s how Payyus handles credit/debit card security…we encrypt it on the phone. Good luck hacking one phone at a time to harvest credit card numbers.
- Cashiers won’t see a customer’s name, credit card number or security code. So if you are in a restaurant the waiter will have to bring you an expensive NFC device so he doesn’t see the card number, I guess….??
- Apple said that it will launch the mobile payment system in October.
- It will work in more than 200,000 U.S. stores when launched in October.
- ApplePay could create momentum for mobile payments, and for NFC technology. Global shipments of NFC-enabled phones will surge fourfold from last year to 1.2 billion devices in 2018, according to the research firm IHS.
- But there are security concerns Apple will have to answer: Researchers have found that if attackers get just “near” enough, they could use the technology to read the phones data — a wireless version of credit-card skimming. This can’t happen with Payyus.
- Apple has also announced an API for Apple Pay so developers can build the capability into new apps. Apple Pay is only available in the US to start, but Apple is “working hard” to bring the feature to other countries.
- Apple has struck partnerships with six major banks including Chase and Bank of America, and 22,000 retailers, including Macy’s Bloomingdale’s, Walgreens, Whole Foods, Disney, Staples, and McDonalds. The partnerships with the banks is to give Apple a split of the Issuing Bank’s fee. That way Apple does not have to charge either customers or merchants for their service.
So there’s 14 reasons why it’s going to be a hit.
Robert Lee is Managing Director of My Market Partners and Lead Strategist for Payyus, an optical scan mobile payment technology available for Merchants. He is available at rlee[at]mymarketpartners[dot]com