Well, I must confess I never bought over Internet using Passbook. Over here, all you can do with it is buying plane tickets. I use my Mac for buying things, and Safari has my credit card numbers memorized. I do too, know all the numbers by heart, since I haven't changed for years.
Apple system is NFC. They choose the best communication standard for mobile payments. It's an open standard anyone can use… and do use. It's already supported in Europe, but instead of the insecurity of a card with your number, name, and other info printed on it Apple's system is a token that never transmits your card's actual data and is protected by their Secure Element.
Ours also is both chip/NFC. But it would require a huge overhaul of all the infrastructure already installed in Europe to be compatible with Apple's protocol. And since, as far as I know, the price of the terminal is supported by the merchant, I really doubt they will invest in a system that would be used for one out of a thousand or so customer.
I don't think Apple's protocol is what you think it is. It sounds like Apple is doing legwork upfront for when the card is added to the iPhone. I suspect the transitions are "normal" with a special card number and rolling security codes. I suspect the transaction will go through on any NFC terminal as long as the bank supporting the card supports the Apple Pay. They said you only need to be somewhere that supports the NFC symbol. The partners rolling it out are banks supporting the new backend to add cards to passbook on devices as well as normal retail places that are just rolling out standard NFC.
So Apple needs to cut deals with the banks overseas for the backend part and have agreements to not limit the transactions like the NFC cards are. Otherwise it isn't really helping much with that 20Eur limit you were talking about.
The one problem with Apple taking a cut is the banks or credit card companies will likely pass that on to consumers. For example, Discover just got through with a six month promotion where if I averaged over $3,000 a month they will pay me $500 in addition to the normal cashback I already receive which range between 2% to 5% depending on merchants.That extra $500 was a nice bonus for doing nothing I don't normally do.
If Apple cuts into their fees, is it possible we will see a reduction in programs like cash back and other credit card perks we get for free now to make up that difference? That part scares me since things like an extra year warranty, generous cash back, and so many other features are not something I want to see go away. That extra year free warranty has saved me a lot of money multiple times.
That’s what I suspected. In this particular case, the US are still using neolithic technologies.
There has been relatively little push to institute chip-based systems in the US because credit card fraud is lower. In areas where it is higher, the interested parties have pushed for these systems to be adopted, and they have.
My feeling is Apple is greedy and really only selling to the mid-high to high end customers. And its apparent in their market share.
So be it. Not so thrilled with the new phones, aside from the cameras which are a little better.
Will wait for the 6S at least.
apple is selling to the mid-high customers because thats where the profit margin is. it takes more unit sales to make as much profit if "racing to the bottom" w/ low-margin, crappier units (think Dell). thats just good business sense...curious that you chastise this as being "greedy". (note to self: do not go into business w/ pfisher...)
There has been relatively little push to institute chip-based systems in the US because credit card fraud is lower. In areas where it is higher, the interested parties have pushed for these systems to be adopted, and they have.
Don’t forget that 'chip cards' are (partly) a French invention (Roland Moreno, 1974 + Michel Hugon 1977) and so there were also economic interests at stake over here, with France's Bull being almost the first company to industrialize production. In fact, we had chip based telephone cards from 1983 on. Credit cards followed as soon as the state of the art in VLSI allowed it. 1990 or so.
That whole thing is ridiculous. He's just saying this as some sort of mushy dream. Apple has no intention of even attempting to do something such as that, and everyone here knows that. You should too.
Apple isn't any more greedy than any other company, and certainly less greedy than Amazon and Google.
Selling higher quality products has nothing to do with greed.
Do Apple still get a percentage of the data fees they demanded of phone companies before they would let them carry the original iPhone?
That to me was egregious greed and incredible cheek.
I will be surprised if that $10 B estimate eventuates. It would imply unheard of generosity by banks.
I don't think Apple's protocol is what you think it is. It sounds like Apple is doing legwork upfront for when the card is added to the iPhone. I suspect the transitions are "normal" with a special card number and rolling security codes.
As long as the transaction cannot be initiated except by the owner of the iPhone, as identified securely by the fingerprint sensor, and the token generated is unique and cannot be reused, there is no need to pass security codes. Spoofing on the token would be pointless, since it is use-and-chuck. Now I suppose that token will use a unique customer ID encrypted by a special key that only Apple knows about, all that embedded in a packet signaling that this is an ?Pay operation. Most certainly, there will be an initial key handshake when the card is added in the application.
Do Apple still get a percentage of the data fees they demanded of phone companies before they would let them carry the original iPhone?
That to me was egregious greed and incredible cheek.
I will be surprised if that $10 B estimate eventuates. It would imply unheard of generosity by banks.
Considering this article from 2011 regarding $190 billion per year in fraudulent CC usage I'd say 5% is pretty low, and I'm certain the fraud has risen since then.
I don't think this is going to be a enough revenue to really impact Apple. Seems like it will likely be a few hundred million in revenue, maybe a billion.
Apple has the ability to scale this worldwide. There are hundreds of payment processors. None doing the end to end security Apple just brought to the table.
Credit/Debut spend: 12Billion a day.
US only.
First year: Apple gets 2% gross profit (after paying Visa for the right to do this for them, as they banking network) of the net transaction as revenue.
First year: Apple gets 1% of the first year credit/debit sales... 120M a day in sales
2% of that 2.4Million a day. 875M a year, in the US.
Apple is all about 'break even' technology... iTMS was that. AppStore was that. Let's assume that's their base number.
100% top line growth rate for 5 years (doubles number of transactions world wide
Assume $800M a year in growth and improvements for 5 years for CapEx to support this growth
875M year 2 profits
13.2B profits a year after 5 years.
Assuming a drop to 50% growth after that for 2 more years
31Billion a year by year 7
At that point, my guess you'll have competition and a couple big problems (network infrastructure).
Is that growth impossible?
hardly. Walmart alone sells 400Billion a year. The top ten companies are 1.1 Trillion. Not fortune 500... just the top 10.
And none of them were announced yesterday as partners.
Most importantly, this is a lock in technology, like iTunes, like Appstore. Not as direct, (you still have your credit cards, so you can walk away without repurchase costs, unlike music or apps), but it's convenient.
And it's the high value customers.
And the solution solves online transactions (NFC doesn't do that, nor does chip and PIN).
Only Amazon is in a place to compete in this space. Samsung, Google and Microsoft are outside players looking in. China may wall itself off, but I think Apple is able to meet their 'requirements' of keeping the profits in China...
If you stand make 2% of the even half of the Gross Retail sales of the world, on top of selling 2Billion people their 'credit card' for $200-$1000, I think it's a pretty good growth model
BUT THE KEY TO ALL OF THIS (nearly) UNLIMITED REVENUE....
Somewhere along the line, Apple has to build a non-premium device with TouchID, and this has to become almost 'free' to distribute. 8 years? less? more? That's the knee point. Every kid in school has one (lunches), every social security person has one, every medicare person has one, every welfare recipient has one.
Oh, that and the fact that gov'ts may not like the fact they can't track payment information by tapping networks... they'll have to get subpoena's from the banks to track payment information (or hack the banks)
That's fairly obvious. Half the mobile market in the US is Apple devices. Now with Apple on board other mobile payment options have a much better chance at wide acceptance, Google's included. As I said earlier, a rising tide. . .
What I expect is that, in the beginning, for a few years, Apple Pay will be the main mobile payment system. But once it's accepted, Android users will become more interested than they have been. Once that happens, and Google upgrades Wallet, because, right now, it's not as well supported by the financial institutions as needed, then that will begin to take off as well.
Discover announced, either yesterday, or this morning, that they are negotiating with Apple. Apple has the six biggest issuing banks, with 83% of the credit cards issued! and no doubt, the smaller banks will follow.
Obviously, Apple wasn't going to even bother with the small banks until they had this in hand, which they now do.
Paypal announced it will work with Apple pay, and Square just abandoned their own Wallet in favor Apple's. This is going to move everywhere. We can see just how many big institutions are already on board. That includes some of the biggest retailers and online stores. More will follow.
Obviously, terminals will be a problem. I mentioned this every time we've discussed this. There are some, in the industry, saying that Apple might either help pay for them, or advance cash for them, the way they do for their manufacturing partners. Apple has spent an enormous amount this quarter for startup costs, far more than ever before. I wonder if some of that is for terminals. I could see Apple spending a billion, or more, to get this started. Who else would do that?
Here's an analysis I mentioned the other day. In comments, I incorrectly stated that Apple wouldn't be able to use iWatch for this, in the first generation. Obviously, I was wrong about that.
Actually what I see happen there is the Banks and CC companies will force merchants to upgrade their terminals or else pay higher fees due to the security risk. This is what happen with the old time carbon paper CC receipts, Merchant were force to upgrade or pay 5% per transaction, verse the 2% or 3% on the card swipe systems.
Most likely Apple will not have to pay or subsidies any of this
Considering this article from 2011 regarding $190 billion per year in fraudulent CC usage I'd say 5% is pretty low, and I'm certain the fraud has risen since then.
Uh. Sure. Germans have recently been forced to accept dents in their salaries to preserve their employments. That's what I call a functioning economy :P
The real question is the UK, especially if Scotland secedes in a week (and I am a huge YES supporter).
I don't understand the concepts of tiny regions breaking away. It's not as though they aren't fairly represented. They are only 5% of the population! and what will they gain other than the dubious thought that they are their own country? Economically, they can't survive on their own. They now receive much more from London than their own economy produces. They think that the Northsea oil will work for them, but those reserves are seriously depleted. So one of two things. London continues their high level of support, which will mean that they are not really independent. Or, London stops their support, and the Scottish economy plunges into severe recession.
The one problem with Apple taking a cut is the banks or credit card companies will likely pass that on to consumers. For example, Discover just got through with a six month promotion where if I averaged over $3,000 a month they will pay me $500 in addition to the normal cashback I already receive which range between 2% to 5% depending on merchants.That extra $500 was a nice bonus for doing nothing I don't normally do.
If Apple cuts into their fees, is it possible we will see a reduction in programs like cash back and other credit card perks we get for free now to make up that difference? That part scares me since things like an extra year warranty, generous cash back, and so many other features are not something I want to see go away. That extra year free warranty has saved me a lot of money multiple times.
Apparently not, because from what I'm reading, banks make more money off mobile payments are are looking forward to this. The CEO of VISA is really excited about this.
Do Apple still get a percentage of the data fees they demanded of phone companies before they would let them carry the original iPhone?
That to me was egregious greed and incredible cheek.
I will be surprised if that $10 B estimate eventuates. It would imply unheard of generosity by banks.
I'm not going to post the article I posted before, but it's here. The case that was made was pretty convincing. His estimate was much higher than mine.
Comments
I still have no idea how to use Passbook.
Apple system is NFC. They choose the best communication standard for mobile payments. It's an open standard anyone can use… and do use. It's already supported in Europe, but instead of the insecurity of a card with your number, name, and other info printed on it Apple's system is a token that never transmits your card's actual data and is protected by their Secure Element.
Ours also is both chip/NFC. But it would require a huge overhaul of all the infrastructure already installed in Europe to be compatible with Apple's protocol. And since, as far as I know, the price of the terminal is supported by the merchant, I really doubt they will invest in a system that would be used for one out of a thousand or so customer.
I don't think Apple's protocol is what you think it is. It sounds like Apple is doing legwork upfront for when the card is added to the iPhone. I suspect the transitions are "normal" with a special card number and rolling security codes. I suspect the transaction will go through on any NFC terminal as long as the bank supporting the card supports the Apple Pay. They said you only need to be somewhere that supports the NFC symbol. The partners rolling it out are banks supporting the new backend to add cards to passbook on devices as well as normal retail places that are just rolling out standard NFC.
So Apple needs to cut deals with the banks overseas for the backend part and have agreements to not limit the transactions like the NFC cards are. Otherwise it isn't really helping much with that 20Eur limit you were talking about.
The one problem with Apple taking a cut is the banks or credit card companies will likely pass that on to consumers. For example, Discover just got through with a six month promotion where if I averaged over $3,000 a month they will pay me $500 in addition to the normal cashback I already receive which range between 2% to 5% depending on merchants.That extra $500 was a nice bonus for doing nothing I don't normally do.
If Apple cuts into their fees, is it possible we will see a reduction in programs like cash back and other credit card perks we get for free now to make up that difference? That part scares me since things like an extra year warranty, generous cash back, and so many other features are not something I want to see go away. That extra year free warranty has saved me a lot of money multiple times.
Originally Posted by EauVive
That’s what I suspected. In this particular case, the US are still using neolithic technologies.
There has been relatively little push to institute chip-based systems in the US because credit card fraud is lower. In areas where it is higher, the interested parties have pushed for these systems to be adopted, and they have.
My feeling is Apple is greedy and really only selling to the mid-high to high end customers. And its apparent in their market share.
So be it. Not so thrilled with the new phones, aside from the cameras which are a little better.
Will wait for the 6S at least.
apple is selling to the mid-high customers because thats where the profit margin is. it takes more unit sales to make as much profit if "racing to the bottom" w/ low-margin, crappier units (think Dell). thats just good business sense...curious that you chastise this as being "greedy". (note to self: do not go into business w/ pfisher...)
There has been relatively little push to institute chip-based systems in the US because credit card fraud is lower. In areas where it is higher, the interested parties have pushed for these systems to be adopted, and they have.
Don’t forget that 'chip cards' are (partly) a French invention (Roland Moreno, 1974 + Michel Hugon 1977) and so there were also economic interests at stake over here, with France's Bull being almost the first company to industrialize production. In fact, we had chip based telephone cards from 1983 on. Credit cards followed as soon as the state of the art in VLSI allowed it. 1990 or so.
That whole thing is ridiculous. He's just saying this as some sort of mushy dream. Apple has no intention of even attempting to do something such as that, and everyone here knows that. You should too.
Apple isn't any more greedy than any other company, and certainly less greedy than Amazon and Google.
Selling higher quality products has nothing to do with greed.
Do Apple still get a percentage of the data fees they demanded of phone companies before they would let them carry the original iPhone?
That to me was egregious greed and incredible cheek.
I will be surprised if that $10 B estimate eventuates. It would imply unheard of generosity by banks.
I don't think Apple's protocol is what you think it is. It sounds like Apple is doing legwork upfront for when the card is added to the iPhone. I suspect the transitions are "normal" with a special card number and rolling security codes.
As long as the transaction cannot be initiated except by the owner of the iPhone, as identified securely by the fingerprint sensor, and the token generated is unique and cannot be reused, there is no need to pass security codes. Spoofing on the token would be pointless, since it is use-and-chuck. Now I suppose that token will use a unique customer ID encrypted by a special key that only Apple knows about, all that embedded in a packet signaling that this is an ?Pay operation. Most certainly, there will be an initial key handshake when the card is added in the application.
Considering this article from 2011 regarding $190 billion per year in fraudulent CC usage I'd say 5% is pretty low, and I'm certain the fraud has risen since then.
I don't think this is going to be a enough revenue to really impact Apple. Seems like it will likely be a few hundred million in revenue, maybe a billion.
Apple has the ability to scale this worldwide. There are hundreds of payment processors. None doing the end to end security Apple just brought to the table.
Credit/Debut spend: 12Billion a day.
US only.
First year: Apple gets 2% gross profit (after paying Visa for the right to do this for them, as they banking network) of the net transaction as revenue.
First year: Apple gets 1% of the first year credit/debit sales... 120M a day in sales
2% of that 2.4Million a day. 875M a year, in the US.
Apple is all about 'break even' technology... iTMS was that. AppStore was that. Let's assume that's their base number.
100% top line growth rate for 5 years (doubles number of transactions world wide
Assume $800M a year in growth and improvements for 5 years for CapEx to support this growth
875M year 2 profits
13.2B profits a year after 5 years.
Assuming a drop to 50% growth after that for 2 more years
31Billion a year by year 7
At that point, my guess you'll have competition and a couple big problems (network infrastructure).
Is that growth impossible?
hardly. Walmart alone sells 400Billion a year. The top ten companies are 1.1 Trillion. Not fortune 500... just the top 10.
And none of them were announced yesterday as partners.
Most importantly, this is a lock in technology, like iTunes, like Appstore. Not as direct, (you still have your credit cards, so you can walk away without repurchase costs, unlike music or apps), but it's convenient.
And it's the high value customers.
And the solution solves online transactions (NFC doesn't do that, nor does chip and PIN).
Only Amazon is in a place to compete in this space. Samsung, Google and Microsoft are outside players looking in. China may wall itself off, but I think Apple is able to meet their 'requirements' of keeping the profits in China...
If you stand make 2% of the even half of the Gross Retail sales of the world, on top of selling 2Billion people their 'credit card' for $200-$1000, I think it's a pretty good growth model
BUT THE KEY TO ALL OF THIS (nearly) UNLIMITED REVENUE....
Somewhere along the line, Apple has to build a non-premium device with TouchID, and this has to become almost 'free' to distribute. 8 years? less? more? That's the knee point. Every kid in school has one (lunches), every social security person has one, every medicare person has one, every welfare recipient has one.
Oh, that and the fact that gov'ts may not like the fact they can't track payment information by tapping networks... they'll have to get subpoena's from the banks to track payment information (or hack the banks)
What I expect is that, in the beginning, for a few years, Apple Pay will be the main mobile payment system. But once it's accepted, Android users will become more interested than they have been. Once that happens, and Google upgrades Wallet, because, right now, it's not as well supported by the financial institutions as needed, then that will begin to take off as well.
Discover announced, either yesterday, or this morning, that they are negotiating with Apple. Apple has the six biggest issuing banks, with 83% of the credit cards issued! and no doubt, the smaller banks will follow.
Obviously, Apple wasn't going to even bother with the small banks until they had this in hand, which they now do.
Paypal announced it will work with Apple pay, and Square just abandoned their own Wallet in favor Apple's. This is going to move everywhere. We can see just how many big institutions are already on board. That includes some of the biggest retailers and online stores. More will follow.
Obviously, terminals will be a problem. I mentioned this every time we've discussed this. There are some, in the industry, saying that Apple might either help pay for them, or advance cash for them, the way they do for their manufacturing partners. Apple has spent an enormous amount this quarter for startup costs, far more than ever before. I wonder if some of that is for terminals. I could see Apple spending a billion, or more, to get this started. Who else would do that?
Here's an analysis I mentioned the other day. In comments, I incorrectly stated that Apple wouldn't be able to use iWatch for this, in the first generation. Obviously, I was wrong about that.
http://seekingalpha.com/article/2464485-analyzing-the-potential-benefit-of-an-apple-payment-ecosystem
Other companies, such as transaction processors, are supporting this as well. Here's one of the biggest:
http://www.tsys.com
Actually what I see happen there is the Banks and CC companies will force merchants to upgrade their terminals or else pay higher fees due to the security risk. This is what happen with the old time carbon paper CC receipts, Merchant were force to upgrade or pay 5% per transaction, verse the 2% or 3% on the card swipe systems.
Most likely Apple will not have to pay or subsidies any of this
I didn't bring the subject up, if you remember.
I still have no idea how to use Passbook.
Like touch id it may have been put out there to get the bugs worked out so now it can be used for its intended purpose all along.
Considering this article from 2011 regarding $190 billion per year in fraudulent CC usage I'd say 5% is pretty low, and I'm certain the fraud has risen since then.
Sorry that doesn't compute
$190B of $4Trillion is almost 25% loss rate. That's too high. Hyperbole.
My guess it's a 10th of that. 2.5% seems like a reasonable number given my understanding of retail loss prevention.
and it's the merchants who pay that fraud cost in the end (not the banks)
Merchants will love to
a) reduce this to zero
b) split the profits (that's 1.2% more efficient operations)
c) if also reduces cash register staffing labor time all the better.
d) if it reduces cash handling, because consumers believe the transaction is anonymous to the merchant, more efficiency
less change mistakes
less staff stealing.
I agree it seems very high.
I don't understand the concepts of tiny regions breaking away. It's not as though they aren't fairly represented. They are only 5% of the population! and what will they gain other than the dubious thought that they are their own country? Economically, they can't survive on their own. They now receive much more from London than their own economy produces. They think that the Northsea oil will work for them, but those reserves are seriously depleted. So one of two things. London continues their high level of support, which will mean that they are not really independent. Or, London stops their support, and the Scottish economy plunges into severe recession.
And then there's Wales.
If they go bankrupt, they’re welcome to petition to join the Union. We’ll take ‘em.
Apparently not, because from what I'm reading, banks make more money off mobile payments are are looking forward to this. The CEO of VISA is really excited about this.