How Apple’s expected announcement will impact NFC payment services
The inclusion in iPhone 6 of an NFC based mobile payments capability backed by Visa, MasterCard and Amex has been widely reported. If the hype is true, it will be the so far un-revealed details that will help determine the mobile payment development agenda for banks, payment service providers and Mobile Network Operators.
So not wishing to be left out of the speculation frenzy ahead of the expected pronouncement from Cupertino, we thought we’d add our thoughts on key things to listen out for on 9th of September.
These are the 6 questions that we believe will determine the impact of iPhone 6 on mobile payments.
1 Will Apple take control of the mobile wallet?
Why this matters: Whether Apple locks everything into its own wallet or allows a more open approach will impact the brand presence of of issuing banks and other service providers. It will also determine their ability to integrate payments with mobile banking service and build functionality into custom apps. A service locked to an Apple branded wallet will also marginalise the role of MNOs (see also question 3)
2 Will there be a partnership with the major card schemes?
Why this matters: Back ending a payment service through the existing card networks gives greatest chance of widespread consumer and merchant adoption. It will leverage existing acceptance infrastructure and keeps Apple clear of much of the risk and overhead that comes with being a full payment processor. It will also help cement the role of the card companies in mobile payments.
3 Where will account details be stored and who will control them?
Why this Matters: Whether storage of account details or token based credentials is controlled by Apple (either using a physical secure element in the device or in the cloud) will determine whether Apple is a facilitator or gatekeeper in the ecosystem. There is also a good chance that the model adopted by Apple (and partners?) will set the norm for the rest of the market. Assuming a SIM based secure element is not involved there will be no management or processing role for MNOs.
4 Will it be NFC dependent?
Why this Matters: An NFC based service (again widely reported and linked to NFC chip vendor NXP) will accelerate this very slow burning technology. Support of remote e-commerce and m-commerce payments and other proximity technologies such as QR code will significantly increase appeal and usage and decouple iPhone payments from dependence on the patchwork international roll out of contactless acceptance infrastructure. The role of iBeacons and Bluetooth Low Energy (BLE) will also be an important indicator of the role of this technology in in-store promotion and (possibly) payment acceptance.
5 Will Apple be looking to make money from payments?
Why this Matters: This will be make or break when it comes to retailer support. Payment processing is a marginal business and major retailers are highly sensitive to transaction fees. If Apple tries to be greedy merchants will resist.
6 Will iPhone actually make a difference?
Why this matters: Apple may not be the dominant smartphone force it was a few years ago but it still has the presence to catalyse the market. iPhone 6 won’t have us all immediately ditching cash and cards at the tills and pulling out our phones to pay. However, mobile payment badly needs high profile services to normalise it in the minds of consumers and the iPhone can certainly help with this. It also needs widely adopted interoperable commercial models that allow anyone to pay anyone else irrespective of their bank, mobile network operator or handset. Whether Apple helps to provide this depends on the answers we get to the questions above.
So now you’ve got excited about understanding the real impact of a payment enabled iPhone 6, check our blog again next week for our analysis of the consequences for the mobile payments ecosystem based on what is actually revealed on the 9th. If nothing meaningful is said it will be short!