Apple CEO Tim Cook speaks about the Apple Pay during last week’s iPhone 6 launch event. Apple Pay allows consumers using new Apple phones to buy things by simply holding the device up to readers installed by store merchants.
Reuters/Frankfurt
In the hype-fuelled technology industry, “revolutionary” is a word in danger of losing its meaning.
But Apple’s new mobile payments system – unveiled just ten days ago – is already winning over the heavyweights of the financial industry and signalling the likely demise of lesser payment alternatives.
Its secret? Apple Pay preserves many existing relationships while inserting a new dominant player – itself – as kingmaker. Its potential audience? The 800mn Apple users who have already connected credit and debit cards to iTunes accounts.
“Apple’s approach appears to be collaborative with traditional payment networks, instead of competitive, and it’s much less disruptive,” says Nathalie Reinelt, a payments expert with banking consultancy Aite Group.
Apple Pay allows consumers using new Apple phones or soon-to-be-released tablets and smartwatches to buy things by simply holding the device up to readers installed by store merchants. Launched on Friday in the new iPhone 6s, it was first unveiled on September 9, when the giants of the credit card industry – Visa, MasterCard and American Express – declared their commitment to making the Apple service work.
Big brand retailers have also signed up and now major banks are racing to out-do on another in promoting the service to customers, hoping to win the lion’s share of their spending and the lucrative transaction business that comes with that.
Softcard, the US consortium of top US mobile network operators, AT&T, Verizon and T-Mobile USA , said last week that it was working with Apple to develop a SIM-card based version in 2015.
And French payments company Ingenico signed a deal this week with Loewe, the Spanish luxury handbag and fashion retailer owned by LVMH, to provide Apple Pay services for its network of 160 stores in 34 countries.
“Without a doubt, the rush is on to cooperate,” said Forrester Research payments analyst Denée Carrington.
Square, the credit-card reader start-up that is the second act for Twitter founder Jack Dorsey, has said its terminals used by many retailers will accept Apple Pay from customers.
Apple is already working with Twitter to create a “Buy Now” button for Twitter users and with Facebook to offer an Apple Pay “Buy” button to its users, according to Trip Chowdhry, a financial analyst at Global Equities Research. Payment systems connect consumers to their money through an extremely complex supply chain of banks, credit card issuers, transaction processors, retailers and other merchants who both cooperate and brutally compete with each other for advantage. Also involved are hundreds of independent payment technology firms - from start-ups to mid-sized players - who have built up healthy businesses spotting and then supplying missing pieces of the system. Banks, telecom network operators and major retailers turn to such specialists to create bespoke payment systems.
It’s these mid-size mobile payments suppliers that have the most to lose from Apple’s end to end payments system.
Monitise appears to be an early casualty of this rapid redrawing of industry alliances. The London-listed company set out 11 years ago as an innovative company making payments work on an array of different mobile phones and in the process doubling revenues each year until recently.
Key to its success was backing from Visa, the world’s largest credit card company, which helped it win deals with banks and financial transaction providers worldwide.
