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Apple Pay, the biggest reseller of Visa and MasterCard

Everybody has been watching and waiting for the announcement that Apple will enter the payments market, and …… drum roll …. they’ve just announced Apple Pay! Cool name, but what is it and will it rock the payment industry?

First the good news. With Apple, one of the biggest technology inventors has just entered the payment market. Along with the fresh ideas this should bring into the industry, it might also generate some speed within technology circles and therefore get new ideas out into the market a little faster.

Now the bad, or ‘not so good news’. Apple Pay is entirely based on credit cards. That means it is not a new payment method. It looks more like Apple will become one of the biggest resellers of the credit card industry. They will only facilitate the use of credit cards, and in our industry players like that have a name: payment facilitators.

From my point of view payment is when money (value) changes its owner. This is the business of the credit card industry. Apple doesn’t do anything here. Therefore I think Apple Pay is not a payment system. However, Apple is very innovative so it might invent a new payment system soon. If Apple begins transferring money directly between iTunes accounts, things will change dramatically but this would mean war against the banks. I just can’t see that scenario happening though, since all the big companies depend on good relations with the banks.

Until then the big technology companies are not really payment innovators, they just help credit cards to become stronger and even more established as the number one payment method used for shopping, internet, mobile, etc.
Meanwhile we will see how Apple Pay will be used by the population of the world (not only by the payment experts). I’m not sure if it’s cooler to wave your mobile phone instead of waving, or even swiping, a card. I will ask my mother if she can explain this to me.

Please share your opinion. Does your mother understand the benefits of Apple Pay? Or is there any benefit?

Daniel Eckstein

Daniel is the Chair of the Board and Founder of Abrantix, a visionary, lateral thinker and the driving force behind Abrantix. With his other partners he has developed the company into a leader in payment software engineering.

Comment by Magister Navis |

Apple makes it easier and safer to pay with a CC the same way PayPal does. PayPal should make a crontract with Apple to support Apple Pay along what they already have including CC, Bitcoin etc.

Comment by Patrice |

Another payment system, or payment ecosystem, is to differentiate authentication of the payer from the infrastructure of payment data exchange. In Europe, we have SEPA which support both direct debit and credit transfers (not cards yet, because cards are Visa, MC …). Therefore with a strong authentication plus a direct debit & or credit transfer you have a brand new payment ecosystem with no interchange fee (thank you for payee/merchants). The point is that money is still held in bank accounts. Therefore Apple has no alternative should they want to control the whole value chain is to open bank accounts and convince you to get your salary credited on this account… Of course the need a banking license to do that.

Comment by Miguel Angel Garcia Baldovi |

I heard the story about Apple and PayPal. But I also heard it was announced that PayPal and EBay will split this year.

Comment by lonogi |

I think we sould make credit cards more exclusive only available for people like me earning at least 100k/month. The average person can’t deal with such things

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