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Apple Pay – an iTunes for the card industry?

16 Sep
Credit: Tambako/Flickr

Credit: Tambako/Flick

The headline in the FT is uncompromising – “Apple Pay is poised to do for payment companies what the iPod did for the music industry” – and the piece that follows is an interesting exploration of what Apple’s announcement last week signified. So is this the end of Visa and Mastercard’s dominance of the world of card payments? (see http://goo.gl/YIsvVS for those with FT access.)

Probably not. Buried in the detail of that piece (and in other analysis from, for example, Mobile Payments Insider http://www.mobilepaymentsinsider.com) is a rather different picture, which has a lot more to do with the security features of Apple devices, and the resultant savings in fraud costs, than with the death of the card titans. The latter might usefully paraphrase Bogart :“Reports of our death are greatly exaggerated”.

Tim Cook, CEO of Apple, made much of Apple Pay being designed with the consumer in mind. Be that as it may, the biometric security technology built in to Apple’s devices will serve the more prosaic end of making payments via an iPhone and other Apple gadgets less prone to fraud. Don’t forget that the launch was in the US, a country who leads the world in patent innovation but has, for whatever reason, lagged Europe by a decade or so in the adoption of CHIP and PIN as a method of verifying payments. Apple Pay neatly gets round that impasse. And also ushers in the new era of single-use tokenisati

And at the rumoured 0.15% per transaction, the merchants, card processors and bank issuers look to have acquired something of a bargain – a price Apple is no doubt willing to concede (for now) to secure its seat at the global payments table, and to lure the banking top brass to Cupertino to pay homage.

So what do the card titans lose? Well, the physical plastic card may not be as ubiquitous as heretofore, but that will probably save them in renewals and lost card replacements. Their infrastructure, and charges to merchants for processing, will roll on pretty unchanged. True, their own e-wallet offerings may now be quietly shelved or allowed to wither on the vine – but that again will yield savings on investments. Perhaps the biggest blow will be to their plans to expand their scope. Apple is pushing them firmly back into a payments processing box and saying “leave the customer side to people who know what they are doing.” Which, as anyone who uses Verified by Visa or the Mastercard alternative will testify, is probably no bad thing.

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HSBC (USA) vs Brett King – the five deadly sins

4 Dec

No doubt many of you will have read the hilarious story of Brett King & his tussle with HSBC USA over their closing his business banking account (see http://goo.gl/hpnHu7). Only hilarious, mind, if you are not Brett King, one of his employees, or a shareholder in HSBC.

It’s really a mind-boggling list of sins:

  • failure to check if business account holder had other accounts (he did, and one assumes profitable ones to HSBC)
  • using wrong (and expensive) communication method (snail mail – Brett uses internet banking)
  • failing to keep data up to date (Brett had moved – which presumably was on the public record apart from anything else)
  • giving wrong advice on channel use (go to a branch when branch is closed)
  • failing to monitor & respond to social media comments (if you are going to run a social media presence, you had better watch what your customers post on it)

Now – confession time. Several years ago, I actually moved my accounts to HSBC – from Barclays, as they were (at the time) even worse. And as a customer I would actually rate HSBC pretty highly – especially on internet banking, where their Global View facility works very well. But then, I’m not Brett King, who doubtless has other thoughts.

And who will no doubt be using this case to strengthen his argument for Movenbank (see https://movenbank.com).

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