A post relating to this item from Finextra:
10 September 2014 | 15538 views | 31
After weeks of rumour, hype and speculation, Apple has made its long-awaited entry into the payments business with a compelling mix of NFC technology, tokenisation, biometrics and must-have mobile for...
Yes, Apple endorsed NFC in the latest announcement. If you are thinking this is going to increase sales of NFC POS terminals, don't hold your breath. Here's why.
Apple is smart enough to know that NFC is a technology that has been tried and tested by giants such as Google but was resisted by merchants. Yet, it had to conform to the norms of finance industry whose big players have laid their bets on NFC. Apple needed
the co-operation of banks and card networks for getting those 800 million card accounts as tokens into the Secure Element and for getting preferential interchange fees by showing reduced probability of fraud (tokens and dynamic codes) and cost reduction in
card management (no need to ship plastics anymore and certainly no need to put that chip on plastic card for EMV).
To me, Apple Pay is iTunes replayed all over again. Steve Jobs negotiated with music and record companies for iTunes. Tim Cook negotiated with Telcos (to get access to Secure Element), banks, and card networks for Apple Pay.
MCX announced just a few days before Apple that it will not be supporting NFC and will throw its weight behind QR codes and barcodes. This is due to concerns around the capital cost of upgrading POS terminals with NFC.
It is only a matter of time for 3rd parties to start writing payment apps that fetch token data from iPhone's secure element and combine it with dynamic transaction signatures or codes to...be sent to POS terminals by generating QR codes instead of using
NFC. See picture for this blog for more details.
Apple is not interested in selling NFC. It is interested in the acquiring fees that come with US $ 12 Billion per day worth of POS transactions. To get that, it needs to support of merchants and retailers. More than anyone else, Apple knows it too well.
That's why it announced that it won't collect any data from transactions to allay fears of banks, merchants, and networks. Why should it try to monetize on data when it can make much more money being an acquirer for 800 million digital cards?