Apple Pay sparks inter-bank battle to be consumers' default choice
Major U.S. banks are set to engage in an advertising dogfight --?designed to sway consumers' choice of their default Apple Pay card --?as they look to take advantage of the simple one-touch mobile payment flow found on Apple's next-generation iPhones to boost profits.
"It's a healthy competition," JPMorgan Chase marketing chief Kristin Lemkau told the Financial Times. JPMorgan Chase launched Apple Pay-centered marketing campaigns on the same day as the service's unveiling, and similar campaigns from Apple's other partner banks quickly followed.
Capital One, for instance, has begun targeting customers using email blasts. With every bank having budgeted significant amounts for this purpose, advertising is likely to appear nearly everywhere --?though Apple is said to be doling out "strict guidelines" for initiatives featuring its long-awaited payments entry.
"You want to create an incentive for people to download their card in Apple Pay and use it as their default card," Lemkau added.
To pay using Apple Pay --?using the default card -- consumers simply hold their finger on the iPhone 6 or iPhone 6 Plus's Touch ID sensor, then wave the device near an NFC reader attached to the merchant's point of sale terminal. A slightly longer process is involved to choose a different card, and banks appear to believe that users are unlikely to change cards often.
Adoption of Apple Pay is expected to be swift, given Apple's clout with retailers and the sheer size of their consumer market. Major banks --?seeking to reduce fraud by pushing biometrically-authenticated mobile transactions -- have swarmed aboard, and Apple Pay will be compatible with the lion's share of debit and credit cards issued in the U.S. once it is officially released in October.
Uptake for rival systems that predate Apple Pay, like Google Wallet, has been comparatively sluggish. Some have suggested that banks are reticent to hand over consumer data to Google, whose main business is advertising; Apple, in comparison, makes money by selling hardware and has little interest in logging customers' spending data, instead choosing to strike financial deals with banks.
Despite giving up a small portion of their revenue to Apple, banks seem convinced that reductions in fraud and, later, the possibility of increasing the volume of small transactions -- the kind that are now settled mostly in cash --?will lead to a net increase in profits with time.
"It's a healthy competition," JPMorgan Chase marketing chief Kristin Lemkau told the Financial Times. JPMorgan Chase launched Apple Pay-centered marketing campaigns on the same day as the service's unveiling, and similar campaigns from Apple's other partner banks quickly followed.
Capital One, for instance, has begun targeting customers using email blasts. With every bank having budgeted significant amounts for this purpose, advertising is likely to appear nearly everywhere --?though Apple is said to be doling out "strict guidelines" for initiatives featuring its long-awaited payments entry.
"You want to create an incentive for people to download their card in Apple Pay and use it as their default card," Lemkau added.
To pay using Apple Pay --?using the default card -- consumers simply hold their finger on the iPhone 6 or iPhone 6 Plus's Touch ID sensor, then wave the device near an NFC reader attached to the merchant's point of sale terminal. A slightly longer process is involved to choose a different card, and banks appear to believe that users are unlikely to change cards often.
Adoption of Apple Pay is expected to be swift, given Apple's clout with retailers and the sheer size of their consumer market. Major banks --?seeking to reduce fraud by pushing biometrically-authenticated mobile transactions -- have swarmed aboard, and Apple Pay will be compatible with the lion's share of debit and credit cards issued in the U.S. once it is officially released in October.
Uptake for rival systems that predate Apple Pay, like Google Wallet, has been comparatively sluggish. Some have suggested that banks are reticent to hand over consumer data to Google, whose main business is advertising; Apple, in comparison, makes money by selling hardware and has little interest in logging customers' spending data, instead choosing to strike financial deals with banks.
Despite giving up a small portion of their revenue to Apple, banks seem convinced that reductions in fraud and, later, the possibility of increasing the volume of small transactions -- the kind that are now settled mostly in cash --?will lead to a net increase in profits with time.
Comments
How about no default choices? Apple Pay doesn’t exist to whore your device out to banks for new customers. It exists to take whatever system you already have and digitize it securely.
How about no default choices? Apple Pay doesn’t exist to whore your device out to banks for new customers. It exists to take whatever system you already have and digitize it securely.
Huh? That makes no sense at all.
You can still use whatever card you want (as long as the bank supports it).
How about no default choices? Apple Pay doesn’t exist to whore your device out to banks for new customers. It exists to take whatever system you already have and digitize it securely.
The default choice is up to the user. You can use the card attached to your iTunes account or scan in a different card. My bank sent me notification that I could use my card with Apple Pay less than an hour after the announcement. You can have other cards on the system but for ease of use on has to be primary.
I'll use the card with most rewards.
Exactly, I definitely want to be able to choose a default card. I use my Discover card for the vast majority of my purchases. I want to be able to set it as my default card and use it most of the time. If I want to use a different card, then I can go in and choose that card when I need to use it. I don't want to have to take those extra steps to pick a card each and every time I pay for something.
Seems to me that Tallest Skil should have read the article
Apple/the banks are not forcing a default card on you. The banks are advertising to try to get you to pick them as your default card. If Discover doesn't join Apple pay before it launches, then I will definitely be taking a look at what kind of offers my other cards are making me to try to get me to use them as my default card.
Chase Visa, Citi MasterCard, what kind of incentives are you going to give me?
Why is the Google Wallet not already consumers preferred choice?
Easy..
Google Wallet, when it came out, used to allow you to direct charge a default CC.. not 'load' your Google Wallet account THEN use that cash.. Google stopped that, forcing you to load your GW account first.. no direct CC charging..
People don't want to commit cash to an account they can only use sometimes.. The day they did that, I deleted Google Wallet.
How about no default choices? Apple Pay doesn’t exist to whore your device out to banks for new customers. It exists to take whatever system you already have and digitize it securely.
I think that you misunderstood.
Say that you have ten cards and you enter them all into your iPhone. Choosing a default is merely choosing the card that you will use most often and it will become the default card whenever you make a purchase. At least I believe that is what it is, after reading the article. You shouldn't have to go and choose a card every time that you make a purchase. Having a default card just makes things easier for the user I think.
It's like choosing a default browser or a default search engine. The banks obviously want customers to choose their bank's card as the customer's default card.
Exactly!
I posted elsewhere, that a friend got a new cc from BofA/Visa. As an incentive, they gave her $200 immediate cashback when she charged a total of $1,500 -- a 13% reward!
Consider, that it was a reward for processing insecure transactions (many were card-not-present) ... and associated risks. But, with TouchID, iP6 and ApplePay -- the risk goes to almost nothing.
I suspect that these cc/banks will wake up and offer incentives (subsidies?) for customers to buy and use an iP6 -- it gives them a one-up on convenience and reduces costs -- to the customer, merchant and bank alike.
Even better, multiple cc/banks could offer additional incentives (subsidies?) to use ApplePay, with their cards, too.
Say, 4 cc/banks, each offering a $200 subsidy when you ApplePay $1,500 using their card with an iP6.
Merry XMAS -- kissy, kissy, kissy - rewards for everyone!
Mmm ... carriers begin to look like dumb pipes ...
Wait, what? They did this? HAHAHAHHAHAHAHHAHAHAHAHAHAHAHAHAHAHAHA
I'm going to repeat my mantra on Google:
That's Google alright. For a stupid company they sure do dumb things.
Here's something to blow your mind. What if the biggest and most far reaching announcement on Sept 9th was ? Pay? This is exactly the paradigm shift the banks and consumers needed.
Maybe because it hasn't been out yet, let alone the hardware to run them is still a few days away. Why do I respond to trolls?
Solipsism is one of the biggest Fandroid trolls on this site. A truly despicable creature.
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Actually, he was being sarcastic, and you'll notice the upside down exclamation mark at the end of the sentence.
What [@]Apple ][[/@] stated. Everything in my comment is excessively sardonic and sarcastic. I wholeheartedly agree that ?Pay is Apple finally getting into mobile payments after they were able to get all the pieces together, unlike several years of NFC inclusion by others that simply added the HW or gave away from free credit to customers in pathetic attempts to spark change.
In fact, I've been very keen on NFC as the most viable communication technology for the last few years (and Apple's Secure Element as a storage solution since Touch ID arrived) but many here were very much against NFC as opposed to BT for the data transition, which I attribute to the aforementioned failured attempts by the others.
It will be interesting what the banks will offer to get you to switch default cards. It would have to be a lot because the cash reward I get yearly is significant.
IMO, the most significant [Apple] announcements in 2014 (so far):
You could argue between 3 and 4 -- the iP6 is the lubrication ($ and scale) that make it all work -- but, I believe that iWatch will have a greater impact over the long term -- making it ridiculousy easy to buy things with ApplePay.
And, we ain't seen nothin' yet!
Why is the Google Wallet not already consumers preferred choice?
Exactly. Google has been bragging about its Google Wallet since its introduction in 2011 and boasting about how almost every Android smartphone has NFC chips, and Android major market share and how Apple is so far behind. You'd think Google Wallet would have dominated the whole mobile payment market by now. No. And Google is too busy talking about how Apple Pay is going to be a huge failure because it's not cross-platform or something of the sort. Google thinks it's better to have 100 brands of smartphones with 300 carriers updating their smartphones whenever they're good and ready, to be the consumer choice for mobile payment security. At least if Apple messes up it will be easier to track down any security breach. Well, with Google Wallet at least Google can claim they were the first with mobile payments like they always do even if hardly anyone uses it. I'm willing to bet when Apple Pay becomes available, within six months, mobile payments with smartphones will increase tenfold over what they are now.
Then Google will do a big "Me, too" and start yelling about how large Android market share is so they have the greatest advantage. Cue the analysts chiming in about how Apple will quickly lose mobile payment market share to Android (despite Google Wallet doing almost nothing to boost mobile payments for a few years years). After all, every Wall Street discussion starts and ends with market share. Gosh, what a bunch of freaking idiots.