Apple Pay provides increased confidence to invest in mobile
“Apple disrupts payments with Apple Pay.” “Turns out Apple Pay isn’t really disrupting anything” “Apple Pay: The Next form of Currency.” “Has Apple Pay Arrived too late?”
The past week has been on fire with bold headlines (including the above) surrounding the announcement of Apple Pay in the US market alongside the iPhone 6 and Apple Watch. Response to the announcement has ranged from world-changing to insignificant. So what is really going on here? And what does it mean for the technology partners and businesses that judo works with?
First, let’s decompose what Apple is actually doing: Apple Pay makes it easier and more secure for iPhone 6 customers to pay both in store and digitally using credit and debit cards issued by Visa, MasterCard or American Express. Apple Pay embraces technologies already supported by other device manufacturers and the card payment ecosystem: NFC (near field communication) and HCE (hosted card emulation). NFC allows iPhone6 owners to touch their phone to a card terminal similar to contactless cards. HCE allows both those NFC transactions and transactions from mobile apps to transmit card data securely by creating anonymous tokens that mean nothing if stolen by a fraudster. These card tokens are controlled by Apple and the card schemes instead of by the merchant and payment service providers. In mobile apps, customers will authenticate the payment using their fingerprint, branded iTouch, allowing for Card Not Present transactions to be passed as secure payments, similar to payments that use 3D Secure today.
So no, Apple Pay is not truly disruptive. But it is massively important. Because we finally have broad agreement from all of the participants in the mobile card payments ecosystem: device manufacturers, terminal manufacturers, card schemes, issuing banks, and acquiring banks. For the most part, the ecosystem is unaltered. The only real losers here are the Telcos who were looking to take a piece of the action and (potentially) alternative payment methods that were benefiting from a lack of alignment from the card payment ecosystem.
Merchants who have been looking at mobile payments with fear or concern over the future now have the confidence to invest in mobile. It is becoming increasingly clear that payment is shifting to the mobile device. Near term, that will be phones. Medium term, it will be phones and watches. At some point it will be something different—but it will all take advantage of the fact that we now have computers in our pockets that are capable of removing unnecessary activities and increasing security without passwords or PINs.
At judo, we are thrilled. Apple Pay makes paying fast, easy and secure for consumers with the iPhone 6. Judo makes paying fast, easy and secure for all consumers, regardless of what device they are using. iPhone 6 is sexy, but even with best case adoption scenarios, Apple Pay is unlikely to command more than 3-5% of the total market of consumers paying on mobile by this time next year. So businesses need to support multiple methods of payment.
Judo will be adding Apple Pay to our integration kits as and when they become available in our core markets (October for the US, hopefully mid to late 2015 for the UK and other European markets). We’ll continue to make paying with whatever method your customer prefers fast, simple and secure. And you’ll continue to have the confidence that partnering with judo helps you sell more and risk less in the rapidly evolving mobile ecosystem.
About Judopay · Judopay simplifies in-app payments, enable frictionless checkouts and intelligently prevents fraud for leading companies globally. Our payments and mobile experts help guide businesses and their development partners to create best in class apps to make paying faster, easier and more secure. Founded by serial financial technology entrepreneurs in 2012, Judopay is backed by leading venture investors and supported by banking and card scheme partners to offer in-app payments that are simple, frictionless and protected.