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Apple is 'Intransigent, Closed and Controlling' Say Banks (afr.com)
Apple is increasingly trying to get banks to implement its Apple Pay mobile payments solutions, but some banks are avoiding Cupertino giant's offer, saying that the company is "closed and controlling". From a report on Financial Review: Three of Australia's big four banks have described technology giant Apple as being "intransigent, closed and controlling" and accused it of attempting to freeload on their contactless payments infrastructure while slowing innovation in digital wallets. In an increasingly acrimonious dispute, Commonwealth Bank of Australia, National Australia Bank, Westpac Banking Corp and Bendigo and Adelaide Bank are arguing that the engineering of Apple iPhones prevent them from delivering mobile wallets to millions of customers. This is because Apple Pay is the only application that works with the iPhone's "near field communication" (NFC) antenna, which communicates with payment terminals. In their latest, 137-page submission filed with the competition regulator, the banks argue that by locking them out, "Apple is seeking for itself the exclusive use of Australia's existing NFC terminal infrastructure for the making of integrated mobile payments using iOS devices. Yet, this infrastructure was built and paid for by Australian banks and merchants for the benefit of all Australians."
Same with "rewards" programs, Airmiles, etc. That stuff isn't free either. Merchants get hit for it, and end up passing that on to everyone in the form of inflated prices. Seriously, how could they not? If a merchant's margin on something is 10% and paying for it with a cashback card takes 1% on top of the 1-3% already charged for using the credit card, of course the merchant's going to do something about that vanishing margin.
Apple Pay charges merchants 0.15% which is right in line with MasterCard, Visa, American Express and Discover. https://www.cardfellow.com/cre...
Apple Pay doesn't charge the merchants at all. It's the card issuers who pay Apple and they are will to do so because Apple Pay is much more secure than their own systems - chips and strips. It saves the banks money because it drastically reduces the fraud rate. So, no consumers are not paying for this. Another feature of Apple Pay (and Google's version) is that you aren't tied to a bank, a credit card (VISA, MC, etc.). That's what the banks don't like. They want to own the relationship.
Very often, people confuse simple with simplistic. The nuance is lost on most. - Clement Mok
Re-read your post. this quote emphasis mine:
Apple is seeking for itself the exclusive use of Australia's existing NFC terminal infrastructure for the making of integrated mobile payments using iOS devices.
Basically Apple won't let other payment providers create their own apps for mobile payments and wants free use of the infrastructure on IOS devices.
Agree. I like this quote:
> This is because Apple Pay is the only application that works with the iPhone's "near field communication" (NFC) antenna, which communicates with payment terminals
If I use NFC for payment related things I don't want another app touching it either. Apple alone does better with security than relying on the bank's developers, the independent app's developers, the terminal manufacturer, and the phone manufacturer (whether Apple or someone else) to all work together. This is why (IMHO) Android has most of its problems--you can't count on each phone manufacturer and the mobile data company to work together to process timely updates even if they just have to reference Google's production code base.
Apple Pay is a net-positive value to the consumer, because the risk rates are lower. As a merchant, your processing charges are smaller with Apple Pay than with swipe or web form. Apple has innovated to create Apple Pay by making contactless payments simple to manage and administer, creating the platforms and hardware to use them (phone, watch), and bringing tokenization to the payment processing system (true Apple Pay vs. just NFC payment).
Another net positive for the consumer (IMHO, depends on who you ask), is that merchants can't track one-time payments for goods, because the payment info always change. This was the primary sticking point between walmart, et al, and the current crop of mobile wallets. They created MCX specifically so they would obtain mobile payments and still retain the data analytics that consumer spending gives these retailers.
I'm sorry but that's just not true.
The two systems are vastly different in implementation. Google are acting as a financial intermediary for every transaction through use of a "virtual credit card" which is what is on your phone and what the vendors see (they never see your actual cards as they are only on Google'a servers). As a result, Google have access and knowledge of every detail of every transaction you make using their system. This aligns with their panopticon business model. By effectively acting as a middleman financial institution they don't need any agreement with banks etc. Every transaction you make actually becomes two 1. Google pays vendor, 2. Google charges your bank.
Apple are not doing this at all, instead they are securely storing your card details on the phone and communicating payment details to and from the vendor and your financial institution. Their system is designed so they don't store your card details nor know about your transactions. However this requires agreement with the financial institutions on the other end.
http://www.investopedia.com/ar...
1) You may be indemnified against fraud but it doesn't mean the banks or merchants are. Generally, merchants end up eating that fraud.
2) The reported fee for Apple Pay is about .15%, which is vastly lower than any credit card (or debit card) and banks are fine with it because the reduced fraud more than pays for it.
3) Contact-less payments already existed but were nowhere near as secure.
Are agnostics skeptical of unicorns too?
It's ironic that you're calling Apple a middle-man when it's actually Google who are inserting themselves as a financial intermediary (were you aware that Google have issued you a virtual credit card?) and knowing every single transaction detail, which of course suits their panopticon business model. There's a reason they're not charging you for that privilege.
Apple are acting as a payment communication medium, keeping no details of your transaction and yes, charging for the privilege. Whether it's worth it is in the eye of the beholder.
This might help explain the differences between the two systems:
http://www.investopedia.com/ar...
My credit card already indemnifies me against fraud, so the risk is already negligible.
Your credit card company may indemnify you, but it doesn't prevent credit card fraud. Someone is going to pay for it. With Apple Pay, the merchant (or it's thieving store employee) never gets your credit card number, so they can't use it for fraud. If the merchant's hardware is hacked, they still can't get your credit card number or your money. Hackers who manage to somehow decode the communication between iPhone and card terminal can't get your money.