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The New York Times' Neil Irwin says Apple Pay is trying to solve a problem that isn't a problem, but hes missing the point.
September 10 -
Apple has officially unveiled Apple Pay, a new mobile payment system in its upcoming line of smartphones, using a model that involves legacy payment companies but adds a new spin.
September 9 -
The banks involved in Apple's mobile payment platform cite the enhanced security, intuitive user experience and brand name. Even if they sacrifice fees, they could make it up on volume.
September 10 -
Apple is betting that tokenization systems offered by payment processors will provide a security boost to its new Apple Pay system at a time when consumers are wary of Apple's cloud-based services.
September 9
Editor's note: A version of this post originally appeared on
Depending on who you ask, the launch of Apple Pay was either exciting or uninspiring. The truth is far more complicated particularly in terms of how it will impact the dynamics of
I would venture that most of the financial institutions on stage at the launch of Apple Pay earlier this week have mixed feelings about their partnership. They have had to sacrifice a lot of the room for negotiation that banks have retained with other wallet players such as Google Wallet and
No bank wants its brand to be overshadowed by Apple, nor do banks want smartphone users to close their app and open up a different wallet to make a payment. But this was not up for debate with Apple, which wants to tightly control the payment experience. This should be a cause of concern for Apple Pay partner banks, for whom enabling payments outside of Apple Pay in iOS is now off the table.
Banks' only hope of having an integrated payment experience is to focus on Android, which supports
Given that Apple will reportedly
But the big takeaway is that from here on out, banks can only gain incremental value from iOS. If they want to create a unified payment system that customers can use as part of their existing banking relationships, they'll have to focus on Android. Should that happen, I doubt that Apple could prevent such moves from diluting its merchant value proposition. But such moves on the part of issuers are hardly long-term strategies to incentivize frequent usage, merchant participation and overall customer value.
Cherian Abraham is a mobile commerce and payments consultant at Experian Decision Analytics.