Let’s start with qualifications. I am not a payments industry pundit, and whatever payments experience I’ve had, it’s always been more on the risk and data side. I’m also a bit out of touch because I’m focused on my company, TrueAccord.
I’m also not an Apple fanboy or hater. I own a great 2 year old Macbook Pro and a Nexus 5; I don’t wake up at 3am to buy the latest model but if it’s good, I’m going to get it.
Still, I want Apple Pay to fail. So much. Why, you ask? WHY?
(tough choice: Platoon or the Reddit “why” meme? ugh)
Here’s why.
First, it’s been just a few weeks and already I hear VCs who previously didn’t care about payments, random entrepreneurs, and journalists talking about Apple Pay like it’s the third coming. The data! What they could do with it! I didn’t hear these people talk this way when previous installments of phone + NFC wallets were introduced, and for a good reason – they are not that interesting, and I think Apple Pay is not interesting in exactly the same way[1].
Second, the talk about Apple now disintermediating banks. Anyone who makes the jump from storing credit cards in a “wallet” to going after issuers or retail banks in one sentence should be awarded a gold medal in mind-athletics. These are completely different activities and mind sets. Most infuriating is the suggestion that disintermediating banks is a corollary to what Apple did with iTunes. You don’t just unbundle banks and sell services through a clunky iInterface. The regulatory and operational impacts are incredibly complicated and Apple, if it ever does anything in the space, will likely partner rather than reinvent. This will further demonstrate what Apple Pay is for me: putting lipstick on a pig.
To further this point, I don’t believe Apple has real payments chops. I didn’t believe that in 2011 and I don’t believe it now. Like Google Wallet, I think Apple will use Pay to do what it knows best; in its case, sell hardware. This isn’t a new sentiment, but it’s still true; I don’t believe the commotion around Apple Pay because I don’t think Apple believes it either. They’re not here to reinvent payments.
Finally, going back to my first point, I don’t think Apple Pay is solving a real problem. That’s the main reason that other wallet providers failed to gain traction. While I understand the idea of Nash Equilibriums and accept that a huge investment in marketing could buy a stake in the market, I’d be surprised (and disappointed, if you couldn’t tell) to discover that consumer behavior was just a marketing campaign away. I don’t believe that, though – I still don’t think Apple Pay solves a problem, I don’t think using it does any good to anyone other than Apple, and I’d rather all that energy put into fitting Apple Pay would be spent on something else.
And that is why I really want Apple Pay to fail.
[1] I guess that makes me a reverse hipster. I hated the idea before it was cool.
Fully agree. with Ohad, HCE might have pushed telcos for the sim based NFC payments ecosystem, but now Apple moves it to the device adding another player to the crowded number of players who wants a piece of the payment cake. What they dont seem to undertand is that interchange margin is becoming even lower. Anyway, Apple´s approach is another step in closing even more its own digital ecosystem, like many others also try to do. The real question here is that the business is in the identity and risks related threats and opportunities that will rise due to the token service that are rolling out all card schemes. It is a fact that NFC will indeed be pushed thanks to the mkt machine that Apples will bring, but it must be cleat that they have not invented anything, and I call for a moment of reflection to see if anyone has thought how merchants will be able to analyse fraud in a world of tokens and closed payments ecosystems…
LONG debate anyway and I indeed want Apple to fail but at the same time help with the big noise it might make, so that every player in the payments and identity ecosystem (users, merchants, PSPs, issuers, etc), have the time to think whether we are really solving any problem or adding even more complexity to the already complex payments industry. Compliance and payments wars to continue…
I’ve read and re-read your post but I still don’t understand. Your first point is that some people are more excited about AP than what you think is warranted. Why does that make you want AP to fail? So that the excited people will look silly?
Your third point is that you don’t think that you don’t think that AP is solving a real problem. Well, maybe it isn’t, and if so, it will likely fail. But why does that make you _want_ AP to fail?
I missed all the comments here, my apologies. AP succeeding will once again show that consumer behavior is just a matter of marketing spend, and while that is generally true, is not something I like being reminded of.
Apple Pay can stop identity theft and the billions lost due to stolen credit card numbers. Retailers will no longer have the credit card numbers which get hacked. And with Touch ID it’s as secure as you can get. p.s. A reverse hipster is still a hipster.
On the surface of it I completely agree, but more importantly, I think I would have stopped at the Dick Tracy watch rather than a payments device. Have you ever seen a lefty trying to pay with a right handed point of sale? As for the contents of the communication (aka the tech) this is probably just the beginning. The current standard for Track3 (NFC) is a facsimile for the other track elements on the mac stripe. Any token is just a proxy. If the token is immutable then there are a number of attack vectors. And if there is a mutable process for the token with every transaction (dukpt) then the vectors are more costly but not impossible.