Skip to content

ACI Blog

5 Steps for Apple Pay to dramatically increase revenues and further disrupt payments

This industry article describes frustrations with using Apple Pay on the London Underground. I mean, unless it’s winter, it’s usually pretty hot and humid down there so having clammy hands is going to be pretty normal. 

Of the subsequent suggestions/comments from the article, I find the tongue-in-cheek idea of Apple Pay users going into the slow lane most hilarious. Also as a payments geek, on the day of the launch, I went straight to the Co-op to use my iPhone to buy something. Having to wait for the fingerprint scanner to read before I could take my phone away from the contactless reader was unexpected and awkward versus tapping my card. 

I now know how to prime the iPhone before paying, but it’s not the most intuitive process and displays no easy phrases on Passbook like “prime for payment” or texts like “primed till Passbook closed, your phone will not auto lock.” 

So should Apple make it more obvious that priming is supported? In the short term no, as they have a captive market right now and they benefit from this. But as society education trundles along, the ripple effect of word of mouth will spread; and with it, will people more often than not unlock before using? I think they will. 

A few years ago I helped kick off Zapp. My focus was primarily on the customer journeys. 

We started with e/mCommerce as we felt that was most broken in the market. POS was a tough nut to crack back then with anti-QR code zealots abound, horrible One Time Token experiences and NFC-only on select Android phones. And back then we felt that a “tap without unlocking” experience was essential due to queue pressures at supermarkets. 

But we were also very aware of the need for context-specific consumer experiences for things like bar tabs, or paying at a restaurant, or making MOTO transactions; “tap without unlocking” wasn’t essential where people had a bit more time. And we were very aware of the need to add value to the wallet to create stickiness, and of course this meant going to the wallet app. 

Is “tapping without unlocking” necessary for POS? I now don’t think so.

People will do mobile payments. Why? Because they can. It’s novelty attraction, and it’s ‘stickability’ will come down to the value that can be added by a computing device (digital receipts, vouchers, integrated loyalty, it just being plain nicer / more modern, it being what I want “because I just do, go away,” etc.). 

Clearly, for London Underground users, they want to use their iPhone and priming is a requirement. And once priming is obvious and understood, people will do it in line at the checkout as they wait to be served. They’ll do it on their way to pick up their takeaway. They’ll do it in the car before filling up at the garage. You get the picture. 

BUT. Once consumers are priming their mobile to make a payment, they then become aware they are unlocking their iPhones. The consumer is right then just one tap away from opening their wallet. And if the merchant supports other connectivity forms, like QR or BLE, then it doesn’t need to be Passbook that the consumer opens; it could be any wallet with competing (better?) functionality. 

But this is where it could get really interesting for Apple. If they open up access to NFC, they could commercialize it (e.g. 3p per NFC payment transaction) due to the value NFC represents (because of customer experience and merchant acceptance, plus roll out). 

Apple would have to accept that there might be competing wallets that might be better than Passbook. But wait a minute, hasn’t that been the secret of their success with iOS anyway? 

Create a platform for creativity and innovation, sell more devices as a result, and gain commercial benefit from new transaction types driven by the ecosystem they facilitated? 

If Apple went this route, they would lose out on the 15-25 basis points per Apple Pay transaction (with cards and accounts provisioned by a different wallet). BUT they’d benefit from the NFC transaction charge, plus increased device sales and possibly wallet app download and in-app fees. 

If the NFC transaction fee was 3p, that would pretty much equate to what Apple Pay gets from a £21 transaction today. And there would be more transactions too with an open platform for additional innovation. Plus other ways to increase commercial attraction for Apple, such as increased upfront charges to app developers wanting access to NFC. 

All this whilst enabling more innovation and disruption in payments, which opens up even more revenue generating opportunities for the Big Fruit. 

For example, opening NFC in this way means it doesn’t have to be the card scheme rails that are used; with Open Bank API and PSD2 approaches coming in, access to the core bank is opening up, and with Apple opening NFC access, they are able to support this movement, whilst also having support for traditional methods (the card schemes). 

So 5 steps for Apple to (a) increase revenues on Apple Pay whilst (b) paving the way for increased innovation in their ecosystem with potential of more revenues for Apple again (there’s a theme here 🙂

Step 1: commercialize NFC transactions from the handset. Could Apple use some software enabled counter communicating with a backend server that tracks NFC payment transactions made by a wallet app? 

Step 2: create guidelines for app developers on approved security guidelines (tokenization for example). 

Step 3: improve functionality of payments priming in Passbook, helping embed its usage in society

Step 4: open up NFC access to 3rd party app developers. There’s commercial value to app developers using NFC for payments, so arguably Apple could charge a bit more upfront. 

Step 5: publicize, that special Apple way 🙂

Practice Lead, Real-Time & Digital Payments

Dean has been in the solution space for over 20 years. Initially starting out at IBM as an IT architect consulting to cross-industry blue chip clients, it was at IBM where, as lead integration architect on an ePOS chip & PIN replacement programme for a leading UK retailer, Dean caught the cards and payments bug. Following IBM, Dean moved 100 percent into cards and payments solution consulting and product management leadership within TSYS, and later with Vocalink. At Vocalink Dean was head of product for what is now known as Pay By Bank App, combining faster payments with mobile payments to replace plastic cards to buy goods (a precursor to PSD2). At ACI Worldwide, Dean has held various product leadership roles covering consumer and merchant management, clearing & settlement, reconciliation, dispute management, mobile payments and now immediate payments and hub solutions. With this latest addition Dean is working with global partners to support the transformation of payments into a digitally-native, real-time industry, supporting any payment, every possibility.

[class^="wpforms-"]
[class^="wpforms-"]
[class^="wpforms-"]
[class^="wpforms-"]
[class^="wpforms-"]
[class^="wpforms-"]