Speculation surrounding Apple’s entry into mobile payments intensified ahead of the iPhone 6 launch, with reports suggesting the company was discussing a potential payments partnership with Visa. An Apple and Visa mobile payments partnership could give Apple access to established payments infrastructure while allowing the company to maintain the tightly controlled user experience that has long defined its products and services.
The technology behind the potential solution was less certain, with reports pointing to NFC as well as Bluetooth and WiFi as possible options. Of particular interest was Apple’s reported intention to retain control over the Secure Element rather than relying on wireless carriers or adopting a host card emulation approach. Such a strategy could give Apple greater control over both the technology and customer experience while positioning the iPhone as a more significant part of the in-store payments ecosystem.
Finextra is reporting Apple and Visa are talking about the iPhone 6 mobile payments solution.
“Apple is in talks with Visa as it ponders launching a mobile wallet this autumn, according to tech site, The Information.
The latest bout of rumours suggest that the ability to make instore payments could finally arrive with the iPhone 6, although The Information’s sources offer contradictory takes on the technology, with one saying that the system is likely to be NFC-based and another suggesting that it will rely on Bluetooth and WiFi.”
Apple, as one might expect, has indicated it has no intention of relinquishing control.
“The report suggests that Apple will not be going down the host card emulation route, instead making use of the Secure Element, although the famously proprietorial tech titan has no intention of “giving up any control to wireless carriers.”
But then there is this statement highly uncharacteristic of Apple.
“Apple hopes that working with Visa will also help it bypass the payment processing chain, helping it to lower costs for merchants and customers,” says The Information.
.
Since when has Apple strived to lower costs of anything to consumers? Apple is famous delivering such significantly enhanced design and function that shoppers will pay more to own Apple devices and services; it’s hard to imagine Apple will willingly walk away from that winning strategy.
An Apple and Visa mobile payments partnership could provide both companies with significant advantages as smartphones become increasingly important to the in-store purchasing experience. Visa could gain another powerful channel for digital payments, while Apple could leverage its large customer base, device ecosystem, and focus on user experience to accelerate mobile payment adoption.
Questions remain, however, about Apple’s business model and its reported interest in reducing payment processing costs. Given Apple’s history of commanding premium pricing by delivering differentiated products and experiences, the company’s ultimate payments strategy may be less about lowering costs and more about gaining greater control over the transaction and strengthening the value of the Apple ecosystem.
Overview by Tim Sloane, Vice President, Payments Innovation
To read the full story, go to Finextra.
