Apple Pay: Was Innovation or Repetition

This post was originally published on 26-September-2014 on Linkedin Apple Pay – Innovation or Repetition

Mobile money as a network-operated platform for financial services is playing a huge role in many economies. Like in the past, the emergence of new services and infrastructure (bridges, railroads, electricity, telecommunications, internet, etc.) has had profound effects on human livelihoods. New ways of moving people, goods, service, technologies, reliable energy or access to information can lead to waves of innovation.

What has been transformed in the markets by existing and new companies; the emergence to capture available opportunities. While Mobile Money or FinTech’s Banking often gets described as a money transfer product but reality is much beyond. This has now blend of big data, data science, AI and machine learning built in.

mobile money was MNO based service for storing and moving money by facilitating the exchange of cash and electronic value between various actors ranging from registered subscribers, businesses, the government and other financial service providers. Let’s have an elaborate discussion on the Money Transfer System and the Mobile Payments Ecosystem of-course with touch of AI.


Apple (As per news 10 Million handsets sold in first 3 days) launching Apple Pay (NFC Solution) from a technology prospective is neither a new offering nor a game changer. Without a doubt, this launch will set a trend for NBFTC (Non Banking Financial & Technology companies) on how to enter into payments and the so-called banking domain and eat the share.

Unlike most of the MNOs which keep on focusing and growing the mobile network in positive way to penetrate this or can say isolated areas, millions of people are now able to connect via a mobile phone. As a result, mobile money has become a viable alternative to traditional bank accounts. The mobile payment relationship between the major banks and Apple is, to put mildly, a delicate one..

If we compare the underlying hardware on handsets (like to like, apple to apple), the Nexus-4 which was released in November 2012 was exactly the same in terms of specification and most of us must have seen Facebook posts as “Welcome to 2012” and Japan’s FeliCa calls it “Welcome to 2004” as they did all (payment through NFC with fingerprints as signature, pulling money from credit cards and supported with wrist watch) that is claimed by Apple now in June 2004 for Japan and its still running very well even though this technology is still unavailable to most users. As a result, only tech-savvy early adopters have embraced NFC to date.

Ultimately, the adoption of a de facto standard and the introduction of user-friendly NFC applications could enable the technology to cross the chasm to gain traction with the early majority and Apple trying to enable NFC-based Mobile Payments to Cross the Chasm. On the contrary, moving away from the Americas and Japan, looking at Africa, according to ITU (International Telecommunications Union) news; 20% of the adult population in Africa does not have formal bank accounts making mobile money an effective alternative.

Thanks to mobile money products, secure and reliable financial management options are now easily accessible. For example, governments – in sub-Saharan Africa especially – are using mobile money to pay pensions and grants.

Apple’s move has the potential to vastly increase mobile payment revenue, which would create a potentially highly lucrative market for banks. But the precise details of early negotiations have the potential to color the nature of those deals for years. As the smoke clears from round one, it appears that the banks chose to start by playing this game the Apple way. The rise of mobile money – particularly in developing countries – is set to skyrocket but that doesn’t mean that traditional bank accounts will become obsolete.

Rather, mobile money and formal bank accounts will work side by side (they have to if banks still need to survive) with many people making use of both simultaneously. While payment methods like cheques may become obsolete, traditional bank accounts will still serve a purpose. Bear in mind that mobile money products are actually owned and operated by banks, or affiliated to them in some way.

The New York Times has reported that Apple Pay could threaten some revenue streams for banks and CC-N (Credit Card Networks), as the technology giant looks to assume a more central role in the financial universe. The eager participation of banks and card companies suggests both Apple’s clout, and the recognition among financial institutions that they face broader challenges from upstart technology ventures, many of which are not as eager or willing as Apple to work with the incumbent financial industry.” The article quoted James Anderson, the senior vice president for mobile product development at MasterCard, saying: “There are schemes that don’t respect and honour the payment networks. We want to invest in programs that respect our role in the ecosystem.”

The article further stated that banks are hopeful that they will make up for the lower rates by processing new types of transactions that are currently being done with cash or other payment methods. The big CC-N will not have to pay any costs for working with Apple. But some analysts warned this week that Apple Pay could, in the long run, push down the rates that both credit card networks and banks can charge merchants.

Credit card fees are largely used to cover the costs of fraud, which are expected to go down with Apple’s fingerprint signature. (New York Times). Rapid advancements in mobile technology are changing the way we live; from the way we connect with others to the way we manage our finances. Technological innovations have made certain aspects of our daily live that much easier. The advent of mobile money has awarded those who were previously unable to conduct monetary transactions an easy and affordable alternative to traditional bank accounts.


Sign-tConclusion -: To conclude this article I pose the same question as always, where is the END and which is the way to go when it comes to Mobile payments is developing something existing to uncover the hidden gems already there is useful. Prior to the emergence of mobile money, many people in developing countries were unable to open a bank account. Lack of infrastructure combined with minimal wages, meant that banking was out of reach for millions of people.

The ‘unbanked’ were essentially stuck between a rock and a hard place. They needed money to travel to the bank, but without any way to receive their wages or subsidies from the government or employed family members; this was an impossible task. Objective of digital payment is to assess the user friendliness, trust and the user’s view on the current and the future authentication methods of cashless payments and to understand ideal payment solutions. The economic barriers are also disappearing, though a substantial additional investment in equipment and cards would be needed to permit even purchases such soft drinks to be made. But transactional privacy will be at the heart of the government’s attack on digital cash.

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6 replies »

  1. Great read, makes me think of my old Blackberry Bold 9900 (purchased in 2011) which had NFC capacity – at the time I remember thinking what use id this as no entity offered a linked service to it – no bank or other services. So Apple isnt really an innovator.

  2. This was just a use of technology lying on table unused ….. hats of to them as they woke up the world

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