Google class- payment

That is the problem with most players in the mobile payments industry: they are solving the problem that doesn't exist. There is nothing wrong with physical cards and wallets. They do their job well. Mobile payments are not about form factor, but functionality. As for Apple, one needs to understand the economics of retail payments: where someone will have to foot the bill for CNP with the iTunes scenario.

There is nothing wrong with current payment tools (cash or card). Most of the mobile payment solutions are too hard to use and most of the cases it does not solve a problem for merchant. If merchant has to upgrade his sale of point, it can not cost anything. 

If any new payment solution will succeed, it has to be faster than current systems, reliable and widely used. Nobody is ready to invest anything if it isn't accpted anywhere. Think about American Express card acceptance. If commission is twice the price than average card, not too many merchant is happy to accept that as preferred payment method unless you run high end store. 

 

All the billions of end user data that is held on file by Apple and Google pertain to cards issued by banks. If I were a bank, why should I be bothered whether my customer uses plastic or mobile app to pay for a purchase? Either way, I'd earn interchange on the transaction. I might actually prefer the mobile wallet option since I can get to levy the higher CNP interchange rate even for a CP transaction.

Given that markets value tech higher than the banking sector - barring a few exceptions - I don't see how Apple / Google will justify a move to enter banking to their shareholders at the risk of diluting their valuation. But, suppose they do and launch a bank. Let's not forget that the billions of cards they have on file are not their own cards. Even by becoming banks, they won't earn any interchange on purchases made with those cards. To overcome this, let's assume that both companies go on a drive to issue their own cards to the billion members of iTunes / Play Stores. Now, let's remember that they're no longer cool tech companies but "yet another bank" that's trying to pitch its card to me. While I'm not sure how long it would take them to acquire billion card customers, I'm very sure that banks would be able to launch a cool mobile phone / tablet / some-other-device in the same time and threaten to take away the tech market from these two companies. If the last statement sounds ridiculous, it's no less or more so than the proposition that tech companies will launch banks.

In a nutshell, if I were a bank, I'd have no reason to be worried if Apple or Google got into mobile wallets, with or without their own banks.

Apple/G can create "non-bank" and still offer banking service. They won't be after interchange, but data. They can be the coolest FI out there. As for banks doing cool gadget, I like your sense of humour.

Data comes with privacy, opt-in / opt-out and many other caveats and, as of now, its monetizability is far from proven. Even if Apple / Google found a way of making money from data, why should that threaten banks? It's not as though they were making money on data before and are going to lose that revenue stream to Apple / Google in future. As long as banks earn interchange - which is something that Apple / Google can't take away from them unless they enter banking themselves - banks should be happy. I'll have the last laugh when Mobile RDC - something that banks introduced - is recognized as the coolest thing going in mobile financial services :)

I see more and more signs why Google and Apple are moving into financial sector. They may not yet want to be a bank in a traditional way but as trusted PSP/ small credit institute with their own payment systems. 

Google has Mobile Wallet and Checkout, if Google Glass will be introduced, why not add payment to device which is always on the move. See similar idea with Mobile Wallet.

Same goes with Apple and iTunes. If they currently earn 30 % commision on purchase from iTunes store, why not add iTunes app for iWatch where credit card company/ bank get transaction fee as today and Apple gets service fee of 2 % from each goodies bought with iTunes payment app.

Both companies already have more data on consumers than any bank even can dream of. They are globally present and have already kind of back bone system for cash management. When new banking rules will finally step in, small consumer loans will be offered by totally new instances.