CUPERTINO, CALIFORNIA – SEPTEMBER 12: Apple CEO Tim Cook shows off a new iPhone 15 Pro during a … [+]
The next Apple
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Tap-To-Pay, here to stay
To be honest, I expected that the platforms (especially Google)
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Overall, about three in four of 130 million iPhone users have enabled Apple Pay, and nearly 56 million U.S. consumers have made an in-store payment with Apple Pay as of April 2023, accounting for nearly half of iOS users . And in 2021, there were approximately 25 million Google Pay users, and it is predicted that there will be an additional 10 million users by 2025. Visa
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It must be said, not everyone is satisfied with Apple’s portfolio. The Consumer Financial Protection Bureau (CFPB) published its report in “Tap to Pay,” which reveals that financial service providers can offer apps to facilitate point-of-sale payments, but “cannot rely on NFC technology on mobile devices using the iOS operating system d ‘Apple’. Similarly, the European Union’s competition watchdog last year accused Apple of restricting its competitors. Access to its Tap-and-Go technology, Near-Field Communication (NFC), used for mobile wallets, makes it difficult to develop competing services on Apple devices.
What they mean is that Apple blocks access to EMV apps, not that it blocks access to all NFC or other payment apps: you can use other payment services like Swish or MobilePay or Payconiq but this is done via QR codes. The CFPB and EU say Apple’s rules mean competition is limited and widely used payment apps like PayPal
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Banks and others are unhappy with this situation because they see Apple as standing between them and their customers. Last week, Apple was ordered to face a private antitrust lawsuit filed by payment card issuers accusing the company of thwart the competition for its Apple Pay mobile wallet. The proposed class action is being led by credit unions who claim Apple is “coercing” people who use its devices to use its own wallet for contactless transactions, forcing them to pay at least $1 billion in overage fees.
Open bank, closed bank
Never mind the issue of transaction fees. As we all know, data is one of the most valuable assets in today’s economy. Even though there may be open bank payment transactions downstream (using Apple Wallet as a front-end to FedNow, for example), the fact is that the data Apple can get from bank accounts is worth far more than the fees for transaction that it could extract. Consumers are, overall, happy to use their digital wallets to make payments. But the fact is that integration with open banking changes the relationship and brings the digital wallet closer to the epicenter of financial life. Tom Noyes wrote earlier this year about Apple and Google wallets becoming a trust center and a super consumer platform allowing consumers to choose and, most importantly in my opinion, protecting consumer data.
As for when this feature – known as “Connected Cards” – will be available to US consumers, there’s a hint in the fine print of the configured Wallet app, which states that “If you’re in the US In the United Kingdom, the connected cards are provided by Apple Processing LLC. It is not clear when the connected cards will actually be launched in the United States, nor which banks will participate. In the United Kingdom, the functionality rests on regulatory foundations which do not ‘currently do not exist in the United States.
It’s identity, stupid
Anil John, technical director of the Silicon Valley Innovation Program at the US Department of Homeland Security, commented on this CFPB report calling it “recommended reading” and saying that if you replace “payments” with “identity” in much of the report, “it gives you an overview and the playbook“. That is, wallets will be used by techfins to become gatekeepers for identity-related transactions that take place on mobile devices (i.e. pretty much all identity-related transactions). He is of course right and, as has been evident for years, when tap-to-pay becomes a subset of a more widespread tap-to-prove infrastructure, these gatekeepers will have a significant power.
In 2014, in my irony reminiscences of Money20/20 in Las Vegas that year, I made the same remark about Apple, saying through an alter ego: “I’m not falling for your ‘easy payment’ waffle.” I know it’s just a Trojan horse for your wallet game: loyalty, coupons and – if you have your dastardly way – identity.” Apple is smart, so I’m sure they have it understood long before me, but it’s all a question of identity.