"Apple is a late-comer to the mobile payments game as rival Google has been experimenting with so-called e-wallet technology for some time. In some implementations, Android handsets carry NFC technology that, in concert with Google Wallet, allow for touchless payments at supported POS systems. Despite early efforts and proliferation of smart devices that would serve as optimal platforms for the tech, a clear market frontrunner has yet to emerge."
When Google thought Apple was heading towards the television party, Google rocketed into televisions and proclaimed world domination. Apple never arrived. And Google's television proclamation is just one more failure.
When Google heard Apple was heading to the mobile payments party, it again rocketed into mobile payments with NFC and again proclaimed world domination. Again Apple did not arrive to the party. Google Wallet failed. Now Google is asking iOS users for pictures of their credit cards!
Apple is taking its time to figure out WHAT to do and HOW to do it instead of running full steam ahead into mobile payments and getting it wrong.
Providing a secure authentication system like Touch ID is a step in the right direction. Enabling purchases through Passbook is another step (I make Starbucks purchases regularly). Turning on mobile payments through its own online stores with Touch ID gives Apple major test bed to learn with.
So far Apple has been extraordinarily success with its mobile payments efforts. IF arriving late to get this stuff right while strengthening the customer TRUST factor means Apple is behind Google then I pray Apple stays behind Google!
But how? If this works with my credit card, great, cause I get the reward points which is why I use the CC anyways. And if my credit card gets compromised, Chase pays for it. I don't lose a dime. So why lose out on free money?
Im all for this if it just charges my card with my phone and fingerprint sensor though.
As noted above, the retailer's systems need to be made safe from attacks like the Target attack. The Target hack is especially important to Apple because it was tied to Target's POS terminals. Those are obviously the devices that Apple's iBeacon would be working with.
In terms of current credit cards, millions (including me) have loyalty cards. Mine is a British Airways Visa from Chase and we have had a few trips to the UK & Europe with those miles, and another trip or two (depending on class flown) available now. I'll pass on any system that screws up that benefit for me.
You might not have much of a choice about this if Apple manages to revolutionize the payment industry. As a small business owner myself I am hoping to God that Apple creates a popular alternative to traditional credit cards. I pay at least $70,000 per year to the credit card companies for the privilege of taking customer payments using their cards, and I'm sick of it. If Apple creates a significantly less expensive system for retail merchants, then Visa, Mastercard, and the like are toast. It might take awhile, but it will be inevitable. But before the card companies expire, they will start dropping their rewards programs and lowering their merchant fees.
I don't consider the free tickets on BA for my wife and myself to be "trinkets". It has been a very good card for us and the only one I bother to have.
$70K in merchant fees is enough to make anyone eliminate charge cards.
On the other side of the coin, how many sales were made because your customer had the credit to make the purchase, as opposed to having available cash in their wallet or bank account? And can you be assured that you will not take a hit when that available credit on a credit card is removed?
I don't believe that Apple really wants to be in the banking business, but they may want a percentage of the merchant fees. 30% has been a good number for them in music, videos and books. That may sound good to them.
I've mentioned this a few days ago and I will say it again. I predict that the next iPhone will include NFC. They will combine their own technologies, iBeacan, Bluetooth, and NFC. Why am I so certain? Because the latest generation of Broadcom Bluetooth and Wi-Fi combo chips (as well as chips from other companies) now include NFC. In other words, Apple doesn't end to compromise their circuit board real estate to make room for it. It comes with the chip they use for Bluetooth and Wi-Fi. If it's there, in the chip, it's in the phone. It's possible that iOS 8 could launch without code making it available to apps, but not likely.
Not going to happen. BT Low Energy has been in every iPhone since the 4S. This gives Apple a huge installed base. If only new iPhones get NFC then their payment system is doomed because most iPhone users WONT have NFC.
Apple needs to come up with a way for me to securely process a transaction with the iPhone/iPad without the need to expose any of my credit card information to the merchant. All the recent POS system breaches at TJ Maxx, Target, etc tells us that that the current system is too unsecure and needs to be fundamentally re-designed.
You are so right. Maybe that is why Apple is treading this space very slowly. Learning along the way. Also, if they get into this, they are taking on big onus if there is some such leaks. I am sure someone will come up with jamming the iBeacon and hacking it.
Apple needs to come up with a way for me to securely process a transaction with the iPhone/iPad without the need to expose any of my credit card information to the merchant. All the recent POS system breaches at TJ Maxx, Target, etc tells us that that the current system is too unsecure and needs to be fundamentally re-designed.
I've been saying once TouchID is enabled on all iPad Minis, iPad Airs, and top of the line iPhones... you've just
1) created a smart credit card that never actually uses CC info on the wire [just encrypted tokens], that
2) identifies the 'card device' and the 'device holder' as well as the 'vendor' establishing bidirectional, one time trust, and
3) with simple timestamps, eliminated replay events... thus
4) if you trust 'iOS' and 'Apple' for encryptions and PKI, there is very little [zero (0) % chance of Id Theft, MiTM, Skimming, etc.
(never say never)
If the payment system has the vendor connected to apple, there is no reason for even the identity of the seller to be in the clear... everything is sent encrypted in Apple's Key, and then in either the phone's key or the vendor's key... Skimming works by intercepting the card. Now, basically, If Apple provides a key to the vendor... no information is shared until Apple vetts all players to each other (buyer to apple, vendor to apple, vendor to buyer, buyer to vendor), but other than to apple, the buyer (save for something to identify them if they desire some affinity program to the vendor) is anonymous.
Not going to happen. BT Low Energy has been in every iPhone since the 4S. This gives Apple a huge installed base. If only new iPhones get NFC then their payment system is doomed because most iPhone users WONT have NFC.
iPhones have a 2 year half life in the G20 world, and the tech-engaged buy top of the line. by 2017, 75% of the iphones will have TouchID, 50% could have NFC. I'm not advocating for NFC nor think it's a winner, but iPhones are not G5 iMacs.... The turn over, especially in the 'spenders' space' [those that would most use a phone based mobile payment system a lot], will drive adoption quickly.
For me, the key is that first step... TouchID enablement. Once that is done, the chain of proof is pretty strong. Hence, my guess is that Apple needs 2 years of Touch ID (When the 5s becomes the 6c, and it's $50 on sale... watch touch ID penetration drive through the roof) to get to critical mass (about 40% of their 500Million iTMS account holders).
I hope they won't go for a 30/70 split for mobile payments ;-)
3% with a minimum $.30 charge makes sense;-). To me the marketing is if Apple can significantly lower fraud. If your loss rate for CC fraud is 5% and Apple drives it under 1% (80% reduction), the on a million dollar business thats 40K a year.
If retail is a $200 Billion a year in the US (Comscore has 2012 at 186B), and the G10 effectively add 3X that. 800B, Apple aims for 10%... 3.5% of that... 2.8B in revenues. 50% margins. 1.4B in profits. Nice little side business.
Comments
When Google thought Apple was heading towards the television party, Google rocketed into televisions and proclaimed world domination. Apple never arrived. And Google's television proclamation is just one more failure.
When Google heard Apple was heading to the mobile payments party, it again rocketed into mobile payments with NFC and again proclaimed world domination. Again Apple did not arrive to the party. Google Wallet failed. Now Google is asking iOS users for pictures of their credit cards!
Apple is taking its time to figure out WHAT to do and HOW to do it instead of running full steam ahead into mobile payments and getting it wrong.
Providing a secure authentication system like Touch ID is a step in the right direction. Enabling purchases through Passbook is another step (I make Starbucks purchases regularly). Turning on mobile payments through its own online stores with Touch ID gives Apple major test bed to learn with.
So far Apple has been extraordinarily success with its mobile payments efforts. IF arriving late to get this stuff right while strengthening the customer TRUST factor means Apple is behind Google then I pray Apple stays behind Google!
Way to miss the big picture for a few trinkets.
But how? If this works with my credit card, great, cause I get the reward points which is why I use the CC anyways. And if my credit card gets compromised, Chase pays for it. I don't lose a dime. So why lose out on free money?
Im all for this if it just charges my card with my phone and fingerprint sensor though.
(Disclaimer: I work for Chase)
As noted above, the retailer's systems need to be made safe from attacks like the Target attack. The Target hack is especially important to Apple because it was tied to Target's POS terminals. Those are obviously the devices that Apple's iBeacon would be working with.
In terms of current credit cards, millions (including me) have loyalty cards. Mine is a British Airways Visa from Chase and we have had a few trips to the UK & Europe with those miles, and another trip or two (depending on class flown) available now. I'll pass on any system that screws up that benefit for me.
You might not have much of a choice about this if Apple manages to revolutionize the payment industry. As a small business owner myself I am hoping to God that Apple creates a popular alternative to traditional credit cards. I pay at least $70,000 per year to the credit card companies for the privilege of taking customer payments using their cards, and I'm sick of it. If Apple creates a significantly less expensive system for retail merchants, then Visa, Mastercard, and the like are toast. It might take awhile, but it will be inevitable. But before the card companies expire, they will start dropping their rewards programs and lowering their merchant fees.
I don't consider the free tickets on BA for my wife and myself to be "trinkets". It has been a very good card for us and the only one I bother to have.
$70K in merchant fees is enough to make anyone eliminate charge cards.
On the other side of the coin, how many sales were made because your customer had the credit to make the purchase, as opposed to having available cash in their wallet or bank account? And can you be assured that you will not take a hit when that available credit on a credit card is removed?
I don't believe that Apple really wants to be in the banking business, but they may want a percentage of the merchant fees. 30% has been a good number for them in music, videos and books. That may sound good to them.
Apple needs to come up with a way for me to securely process a transaction with the iPhone/iPad without the need to expose any of my credit card information to the merchant. All the recent POS system breaches at TJ Maxx, Target, etc tells us that that the current system is too unsecure and needs to be fundamentally re-designed.
I've been saying once TouchID is enabled on all iPad Minis, iPad Airs, and top of the line iPhones... you've just
1) created a smart credit card that never actually uses CC info on the wire [just encrypted tokens], that
2) identifies the 'card device' and the 'device holder' as well as the 'vendor' establishing bidirectional, one time trust, and
3) with simple timestamps, eliminated replay events... thus
4) if you trust 'iOS' and 'Apple' for encryptions and PKI, there is very little [zero (0) % chance of Id Theft, MiTM, Skimming, etc.
(never say never)
If the payment system has the vendor connected to apple, there is no reason for even the identity of the seller to be in the clear... everything is sent encrypted in Apple's Key, and then in either the phone's key or the vendor's key... Skimming works by intercepting the card. Now, basically, If Apple provides a key to the vendor... no information is shared until Apple vetts all players to each other (buyer to apple, vendor to apple, vendor to buyer, buyer to vendor), but other than to apple, the buyer (save for something to identify them if they desire some affinity program to the vendor) is anonymous.
Not going to happen. BT Low Energy has been in every iPhone since the 4S. This gives Apple a huge installed base. If only new iPhones get NFC then their payment system is doomed because most iPhone users WONT have NFC.
iPhones have a 2 year half life in the G20 world, and the tech-engaged buy top of the line. by 2017, 75% of the iphones will have TouchID, 50% could have NFC. I'm not advocating for NFC nor think it's a winner, but iPhones are not G5 iMacs.... The turn over, especially in the 'spenders' space' [those that would most use a phone based mobile payment system a lot], will drive adoption quickly.
For me, the key is that first step... TouchID enablement. Once that is done, the chain of proof is pretty strong. Hence, my guess is that Apple needs 2 years of Touch ID (When the 5s becomes the 6c, and it's $50 on sale... watch touch ID penetration drive through the roof) to get to critical mass (about 40% of their 500Million iTMS account holders).
I hope they won't go for a 30/70 split for mobile payments ;-)
3% with a minimum $.30 charge makes sense;-). To me the marketing is if Apple can significantly lower fraud. If your loss rate for CC fraud is 5% and Apple drives it under 1% (80% reduction), the on a million dollar business thats 40K a year.
If retail is a $200 Billion a year in the US (Comscore has 2012 at 186B), and the G10 effectively add 3X that. 800B, Apple aims for 10%... 3.5% of that... 2.8B in revenues. 50% margins. 1.4B in profits. Nice little side business.
And that's before Apple becomes the 'bank.'