30 November 2015


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Mobile Payment the 'Apple Way'

14 March 2014  |  2209 views  |  0

Memories are unreliable because our memory is not an archive of genuine documents. After certain time interval facts are re-weighted and positive events are preferably preserved in our long-term memory. This human characteristic makes many believe that if Apple will bring a mobile payment system on the market again another revolution in this economic sector is granted.

If Apple enters the market - which still is not sure - the probability of a real paradigm shift for payment economy in my opinion is well below 10%. To proof this thesis, a glance at past successes and failures will be helpful.

Apple has always been successful when the company integrated established techniques in a new way and gave their customers a new user experience. This applies to the Macintosh, the iPod and the iPhone. More interesting are the failures and there were far more than the famous blockbusters. Starting with the Apple III, incidentally the first PC from the early years, after the resignation of Steve Wozniak, till the "music network PING" - What was that actually again?

In between there are a lot of products in mediocrity, beyond any genius, as offered by any other company. Now looking on the flops more closely, one finds that the largest part of these failed mainly due to exaggerated ideas on price (Lisa, game console Pippin, 20th Anniversary MAC, ipod HiFi).

The Company is not ready to give up an exorbitant profit margin (see current iPhone 5C). I think for a real payment service provider they are too greedy. For instance if Apple would visit the corporate headquarters of a German grocer, margins of 3% are completely utopian. Reaching the realistic range of less than 0.3 %, the question of co-op payments needs to be clarified. But here we are not discussing money from the grocery store to Apple. The partners in this case expect the reverse direction! The sales representatives from Cupertino will find themselves in a new and unfamiliar situation. Not like the negotiations with mobile network operators, where prices and quantities could be dictated.

There is a field that brings the margins which Apple is expecting, adult entertainment. But I think they do not want to go into the dingy corner.

A payment provider, who does not reach a significant number in POS landscape, should be regarded as niche player, and not as a game changer in the payment section.

So how can Apple get the maximum profit out of a mobile payment solution?
In a gold rush, some entrepreneurs dig for gold, and some sell shovels. So guess which part will be taken by Apple? The passport ecosystem will be the framework in which the banks will be happy to rent a place for offering their mobile payment transactions. On top Apple will sell high price couponing tickets to the retailers. This is another money printing machine but no revolution in payment.

But there is One More Thing!

"Hey Apple , if you hear me, you 've got this little side switch on the iPhone. On the iPad one can assign different functions such as speaker on / off or orientation lock on / off. Now, when you build NFC into the iPhone, you could use this switch to control the NFC function on / off. That would be a real super easy magic safe operation of NFC. This is the way how your customers love your products and it would be a unique selling proposition for you."

Oh I forgot about "new" and "great" products you don't talk to anybody. So then to all innovative manufacturers of NFC enabled smartphones:

Build in this switch before it is patented by Apple! 

The Apple Way TagsMobile & onlinePayments

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