As I have said before, Apple Pay is safer than using your standard credit card (due to the underlying tokenization of the credit card number that is an industry standard feature they are leveraging) and is more convenient (truly something that Apple should be recognized for).  Especially compared to the bar code scan approach that CurrentC took.

While merchants hate the interchange fees and all involved (i.e. merchants, networks and banks) dislike Apple taking a piece that they all wanted (i.e. we added a fourth to that list that is now taking their slice of that interchange fee), the convenience to the customer is more important.

And as long as Apple retains control of the activation of the pay feature via the "Touch ID" button (especially a locked phone), they have a lock that the rest can not get around.  Android will be there, too for the same reason.

Although I wonder with the Android’s more open approach, if applications will be able to get around an exclusive capability that Apple has managed so far to retain.  And if so, will that eventually force Apple to relent.

Here's something counter intuitive:

http://www.cnet.com/news/android-users-more-loyal-than-ios-owners-study-shows/

I agree it seems odd that Apple has managed to maintain that control on the Touch ID on a locked phone but so far no one seems to have pushed enough or taken it to court as far as I can tell. Once the phone is unlocked, the Touch ID is. of course available, and many applications have already enabled login into their application via that technology.

I don’t know if Apple has any restrictions on the wallet functionality with Touch ID. I’ve heard the answer is “yes they have a block on that” but I haven’t had the time to verify.

I suspect the transparency of the cost of the phones these days is what is bringing about the change in “loyalty”. Just saw an item the other day that Verizon is joining other providers and is ending the subsidy of the phone cost. So now it is much more clear how much difference there is in cost between an iPhone and an Android. Given that Android has caught up with feature/function there isn’t that much difference from the average end user perspective so why pay the differential has to be a purchasing decision factor.

Only real differentiator I can see is how much Apple protects things (well at least tries to with the walled garden approach) vs. Androids open approach. I’m not too sure how many average end users perceive that difference. I know a few of us on the mail list appreciate/value it and others don’t.

I wonder if this will force a price reduction by Apple.

And the article “Xiaomi: The Apple Inc. iPhone Killer?” (http://www.mauldineconomics.com/connecting-the-dots/xiaomi-the-apple-iphone-killer) implies that this might be happening anyhow due to sales pressure by competitors. Lead line is: “If you own Apple stock, you better pay attention. A Chinese company named Xiaomi is eating Apple’s lunch in China, and its popularity is slowly spreading across the globe.”

My prediction that apple won't be a trillion $ co still stands. Their one trick is getting old.

My company secretary in HK tells me that Xiaomi is unbelievably popular. Its price feature point is unmatched and the online buying price is also unmatched. HK is the most dense in the world; 8m connected people in a city state. I'd watch these guys; they are disruptive.

Apple Pay presumes two things that limit it:

1. Apple Pay requires contactless EMV POS stations, which are the only ones that can provide the NFC capability used by Apple Pay. Very few NFC-capable POS stations exist, so Apple Pay has not taken off.

In October, liability for fraud will shift to merchants who cannot accept EMV charges. But merchants can accept EMV charges either with contact or contactless POS stations, Both POS stations and cards are cheaper in contact versions, so banks are issuing 90% of their EMV cards as contact cards. Merchants can avoid the liability as long as they can read a contact EMV card. So why should a merchant install a more costly contactless POS station?

2. By partnering with the card companies, Apple has chosen a side in the ongoing war between merchants and the card companies, who to date have enjoyed an advantage. But the merchants are now fighting back. It remains to ne seen whether NFC takes off, and if it does not Apple Pay cannot.

So Apple Pay has not won, yet.

Outside the US, Australia for example, all POS systems are NFC enabled and for any transaction under $100 it is "tap and go" (no pin). All bank phone apps allow you to tap and go; it's really not that hard to open your phone and open your app, anymore than it is to open your wallet and pull out your card. I tap and go for my morning coffee every day, and there is no Apple pay in Australia... I don't know what they will do when they try and turn up... there's nothing to turn up to...

There is no question but that a POS station with NFC is more costly to make, but mfgrs may offer at the same price NFC and non-NFC POS stations, both capable of handling EMV cards with embedded chips. But the more costly to make terminals cannot handle as "contactless" the contact-only EMV cards being issued by banks and credit card companies, hence my feeling that the widespread use of NFC in the US is not yet certain. It would be less so if CurrentC were already released,

The famous October date for shifting scam liability to merchants depends only upon them having a contact POS station for handling EMV cards.

The delays in CurrentC may be due to its independence of NFC- capable contactless POS stations. But there is nothing in CurrentC to prevent a version that uses NFC. If NFC takes off in the US, expect such a version,

Apple Pay's use of tokenization is not unique. CurrentC uses it, and it was developed by merchants to start with.

Apple Pay has one advantage over CurrentC: the ability to pay with a locked phone, using a prolonged depression of the one key it carries on its face, both for opening the payment app and fingerprint ID. (Similar to opening Siri, which must require two depressions).

Apple Pay requires NFC and CurrentC does not, though it could be changed if NFC becomes widespread. MCX therefore has reason NOT to install the NFC-capable POS stations required by Apple Pay.

But CurrentC is not yet released, maybe because it needs NFC. (Every transaction needs two-way communication, afforded by NFC, CurrentC uses a bar code reader for user-to-POS station communication, but what besides Starbuck's use of scanning by taking a pic of the POS station is available for the other direction? NFC. Or something else- like cell phone messaging. Not clear what MCX is doing.

What I’m hearing matches what Pete reports in Australia; that the majority of the new POS systems are going in with NFC capability. Primary driver is that many millennials prefer electronic vs. physical cards and that trend is expected to grow. Seems to be a choice of upgrade now or upgrade again later on and most are saying once is enough thank you.

Matter of fact, most new ATM’s are being manufactured with NFC capability too.

So far this discussion has made a common but seriously mistaken assumption: that all transactions have equal value.

No. Anyone in the transaction chain would choose to invest in transaction turf at the higher end of the retail spectrum than the lower tiers. Macy's is the more desirable turf compared to Target; Whole Foods Market is more valuable turf than 7-11, and so on.

And the higher-end consumer turf is where Apple Pay (and Apple products and services in general) is seeing its success. That's by design. Apple is perfectly content to let everyone else scramble and shove for the lower-end scraps, whether it's point-of-sale transactions or smartphones or netbooks.

It's manifested in many ways, such as the relative commercial activity of iPhone vs. Android users. This is just another such. And it works.

View markets monolithically at your peril.

--S.

You make Apple sound like an elitist brand for the 1% whose only goal is super profits from those that matter.

Which it is.

Remember, this is not just Apple Pay but also soon Android Pay.

Fully agree you always focus new technology rollout in the area that can best afford it and where customers are most likely to accept any minor bumps in the road. They tend to be technology focused and understand to a certain level any minor issues in the initial rollout. Well, as long as you quickly address them! This has been my model as well as other vendors for new technology rollouts to customers.

But you must also match your customer segment’s requirements. Hence why we see NFC in fast food markets, coffee shops, etc. where markup is not high but goal is fast throughput and the need to match customer expectations. Kids buy stuff that have incredibly low per transaction dollar value but they expect electronic. Almost every focus group study, etc. bears this preference for electronic usage out.

After all, in the US with its specific cell-phone carrier market, it doesn't cost most users much more (or any more) to tote an iPhone around than another smartphone. It doesn't cost much more (or any more) to wear an Apple Watch Sport than a Citizen or Seiko or Movado. And so on.

Sure, you can buy a cheap-ass Armitron or Timex at Wal-Mart. But that doesn't make Apple any more elitist than Citizen or Seiko or Movado.

Stop me if you've heart this analogy before, but Apple isn't like a lavish mansion atop a hill surrounded by the lands of gentry. It's more like a tidy gated community that's orderly, safe, and pretty in a sanitized way.

Nothing wrong (or elitist) about that. There are many such parallels. Just think of the automotive world or the sporting-goods world or any number of other non-tech markets. It's just that in tech, Sony in the olden days and now Apple have borrowed the BMW play-book.

And the tidy/sanitized aspect isn't the attraction for all its users. Some of us just like the way their stuff stays out of our way.

--S.

Check this out:

HTC Caught Stealing Fingerprints as World-Readable Clear Text

"Four FireEye researchers have found a way to steal fingerprints from Android phones packing biometric sensors such as the Samsung Galaxy S5 and the HTC One Max."

"The team found a forehead-slapping flaw in HTC One Max in which fingerprints are stored as an image file (dbgraw.bmp) in a open 'world readable' folder."

"Any unprivileged processes or apps can steal user’s fingerprints by reading this file," the team says, adding that the images can be made into clear prints by adding some padding.

It is one of four vulnerability scenarios in which biometric data normally secure in an Android phone's TrustedZone can be pilfered....."

I definitely think Apple is heading more and more into the rarefied air of the elites... and can I add that it has been unnaturally helped by US monetary policy since 2008... which is ending both with US on the up and China on the down trend. It is looking very, very, very fragile to me...

I think the cost of a device washed in the tears of an angel may actually start to look too expensive... and the unwashed products start to look competitive... these things are non-linear.

Peter,

Agreed.  And that is why the industry is moving to tokenized credit, etc. cards.  Significantly reduces the risk to bank, merchant and especially customer.  Apple Pay, Android Pay, etc. wallets leverage it.  Not clear what/how CurrentC handles this.  I need to do some digging as I’m now curious.

Eric

We don't have SSNs in Australia; it is illegal to use a government provided ID for a commercial purpose in Australia.  Therefore you do not have an identity to steal.  If an identity is stolen, it is a record from the institution that provided it that has been stolen, and for as long you follow the rules, they are responsible.

Cheers...Pete

Is capitalism broken????

--S.

I stand by my prediction; there's a few tipping points going on right now.  Its a different world this week.

The process of EMV and Apple Pay/Android Pay are separate and distinct.  While they both may reference back to the same credit card account, they use different logic.  The Apple Pay/Android Pay uses an alias credit card ID while EMV uses the actual card account number.  The key point is that with Apple Pay/Android Pay, the merchant never knows the actual account number as the token vault operator does that actual translation so the transaction posts to the credit card account.

CurrentC cannot be using the same tokenization process since that process is defined and implemented by the credit card network vendors and their partners (merchants and banks).  Since CurrentC’s focus is to avoid the interchange fee charged by the networks, they cannot tie into that token vault translation process.

We tried using scan codes with various vendors years ago and found that the variation in lighting levels, the variation in how phones are held, how clean/smudged the glass was, etc, etc. severely impact the reliability and quickness of the dual scan process that CurrentC is based on.  We also tried it at ATMs and ran into the same issues even more so since they are usually outdoors.  I know from my experience with Starbucks that it too has scan problems at times.  My bet is that CurrentC are experiencing the same scan issues and that is what is causing the delays in rollout.  I wouldn’t be surprised to see them switch to NFC.  I wonder if there are any licensing issues or exclusive agreements with the phone vendors or POS vendors holding that up?  I’ll have to ask around to see if I can find out what is going on.

Android Pay Rolling out and Info on Samsung Pay

A couple of related items:

Google Pay announced their rollout date to be today. And the other day Samsung gave some details on their Samsung Pay functionality.

Google rolls out Android Pay in U.S.

Reuters: Google said it would roll out Android Pay in the United States on Thursday, allowing users to pay by just tapping the phone.

Android Pay will work with all near-field communication technology-enabled Android devices using Google's KitKat 4.4+ operating system.

The other item is Samsung Pay technology. They are not only supporting NFC, but with their purchase of LoopPay ,they can leverage the magstrip readers, which is pretty clever and might give them an edge until the NFC devices are rolled out.

I’ve noticed in the last few weeks that a lot of the merchants I deal with are installing their new POS devices as the Oct deadline for EMV support approaches. And all of them have the NFC symbol. I haven’t been able to use the EMV functionality yet with any of them but Carmen did at one merchant recently and said it was a lot slower than usual. She is anxiously awaiting the 6s so she can retire her 5s and switch to Apple Pay as that is faster based on our usage of my experiences with Apple Pay.

As one of these articles points out, many are projecting that NFC will become widely available in 2016.

Google rolls out Android Pay in U.S.

Apple Pay vs. Samsung Pay

Samsung Pay vs Apple Pay

Samsung Pay Smartphone giant seeks mobile payments

What is Loop pay?

Note that all of these are leveraging the credit card networks with their tokenization technology that protects the actual credit card number.

It will be interesting to see if CurrentC can catch up and compete with these solutions. Given that CurrentC is really focused on the merchants issue about credit card transaction fees and nothing about the consumer’s requirements, convenience or interests, I have my doubts.

Eric

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Apple pay is very user friendly

 

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