Apple Pay Roundup: Everything We Know, Coming in October

[hindmost]

As cool as this sounds, I don't understand how this is going to gain traction if it's limited to people with the latest iPhone or Apple Watch.

uhhhh......Ten Million (that's 10 million) iPhone 6 sold just on first weekend. That's a good start. Samsung should have such product traction in the U.S. on a mere updated phone over a couple days of availability.

Apple Pay introduction will likely drive the thug-thief population nuts. I know some them who hang at a local tattoo parlor and they were already enraged when Apple introduced the 'touch' for phone access via fingerprint on the iPhone 5s. That cut most of their thievery to a mere 'grab for it's parts value' which not nearly as good as a workable phone.

 

[solarguy17]

NFC IS a standard, Apple will force more stores to have NFC, which means even the Android users will win, because if it supports Apple Pay, it'll support GW, and ISIS (Softcard) just fine...as well as the contactless cards given out by many banks like Wells Fargo, and US bank.

I think the companies have to agree to use Apple Pay, otherwise why advertise specific companies and why did Best Buy and Walmart say they were supporting a different NFC "style". Seems like the company had to agree to use it.

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Considering how they are touting their hardware security measures, don't expect them to allow non-iPhones to use Apple Pay.

No, I agree and I don't think we will see Apple Pay on Android but it would help adoption.

 

[Fenez]

I think the companies have to agree to use Apple Pay, otherwise why advertise specific companies and why did Best Buy and Walmart say they were supporting a different NFC "style". Seems like the company had to agree to use it.

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U


No, I agree and I don't think we will see Apple Pay on Android but it would help adoption.

If you see nfc apple pay will work.. Apple pay is nfc plain and simple.. There is no difference between apple pay and regular nfc, they both use the same terminals to make a purchase.

 

[ptb42]

Come on Apple, if you can get the grocery store chains and gas stations on board with this, it will become the standard!

Apple doesn't have to do anything. If the merchants put in point-of-sale terminals that accept contactless cards, pay will work.

I have this fear that Walmart will win with their standard, sigh.

The system that Walmart is using is lame, as currently implemented. You can't even use a credit card with it, although that may change in the future.

I expect the opposite will happen: WalMart will enable the NFC functionality on their PoS terminals (presuming they have it).

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So who is Apple taking their cut from?

The issuing bank (who services the credit account). A portion of the merchant fee goes to the payment processor, and the rest goes to the bank.

In exchange for the extra security, the banks are giving Apple 15 cents per $100, out of their fee.

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The US lacks a secure payment system. EMV has a low level of acceptance here (just used my chipped card at a place today that has PIN pads with disabled EMV readers, becoming a common occurrence ) so the way I see it, this might be the push the US needs to get off the antiquated, insecure magstripe.

The liability shift in the US occurs 10/2015: merchants can continue to accept magstripe cards, but they assume liability for any fraud. The exceptions are ATMs and pay-at-the-pump fuel dispensers. But, those most also be converted by 10/2017.

This switchover has been in progress for years, and the deadlines were set long ago. So, merchants are already installing the new EMV terminals. They may not yet have them enabled, but I don't know exactly what has to happen to do so. I know that WalMart replaced all their terminals, but have been enabling the EMV readers store by store over the past few months.

pay simply gives merchants contemplating the upgrade in the next 12 months an incentive to also include the NFC option in their terminal.

 

[ptb42]

Is it not? Wonder why when I go to checkout all they ask me for is 199+tax to take the device home. But don't let facts get in the way of your comments.

I think his point is that you pay extra during that 2-year contract.

At AT&T, if you have a 10GB data plan, you pay $25/month extra for a contract. Over two years, that's $600. In exchange, you get a $450 reduction in the price of the phone.

It would be better to pay the full price of the phone up front, and have lower monthly payments. Or at least use Next/Edge, which finances the phone over a selected number of months, and the device payment actually ends.

 

[ptb42]

I think the companies have to agree to use Apple Pay, otherwise why advertise specific companies and why did Best Buy and Walmart say they were supporting a different NFC "style". Seems like the company had to agree to use it.

Walmart has either turned off their NFC readers, or deployed terminals without that functionality. They are claiming that "CurrentC" is their "alternative", when it is nothing of the sort. It doesn't even work with credit cards: you have to give them authority to debit your checking account. It's not NFC, anyway -- you have to install an app on your phone, and I suspect it is either Bluetooth or cellular/Wifi to do the authorization. I don't know Best Buy's excuse, but I suspect it is similar.

CurrentC is really a customer loyalty program, with payment capabilities grafted onto it. When you use it, all your purchases are tracked. With pay, the merchant doesn't even know your name and real credit card number.

Walmart and Best Buy are just spreading FUD to cover up the fact that they are backing the wrong horse. They'll figure it out eventually, when people refuse to give them the necessary financial information.

 

[JAT]

I may have misunderstood, but doesn't all this mean you have to go into a store?

How gauche.

 

[dontwalkhand]

I may have misunderstood, but doesn't all this mean you have to go into a store?

How gauche.

Actual stores will be around for quite some time to come.

 

[infantrytrophy]

WalMart's scheme seems to want either
1. pre-loaded cash, or
2. debit from my bank account

NO credit cards.

Given what has been going on at Target and Home Depot, why on earth would I want to allow WalMart access to my bank account ??

Anyone else out there feel the same way ??

Yes, absolutely! I don't do debit cards at all - too much risk of your bank account being emptied. At least with a credit transaction, you have the ability to check the transactions before actually paying. I don't understand why anyone would use debit cards instead of credit cards.

 

[dontwalkhand]

Yes, absolutely! I don't do debit cards at all - too much risk of your bank account being emptied. At least with a credit transaction, you have the ability to check the transactions before actually paying. I don't understand why anyone would use debit cards instead of credit cards.

I use credit cards all the time too, (I mostly use my USAA credit card) however, not everyone, particularly those whom have bad credit, can get a credit card, so they have to use a debit card when making purchases., well there is the option of a secured credit card too, but they don't usually make those known.

 

[kdarling]

uhhhh......Ten Million (that's 10 million) iPhone 6 sold just on first weekend. That's a good start. Samsung should have such product traction in the U.S. on a mere updated phone over a couple days of availability.

Note that wasn't just in the US. It was 10 million sold to users and retailers in 10 countries (including Japan where it's free on two year contract).

Of those 10 million, it's looking like 1 out of 5 to 7 sales are iPhone 6+.

Now, how many will be sold in a month? When the iPhone 5S/5C sold 9 million the first weekend last year, they ended up averaging 17 million a month. So there's a big burst at first, then it settles down.

At 10% more sales this year, we can predict that the iPhone 6 should sell about 20 million a month, of which 3 to 4 million will be the iPhone 6+. Let's give it the benefit of the doubt and say 5 million because of China.

Samsung also sold 5 million Note 3s in its first month. So phablet sales are probably comparable worldwide.

 

[Kosloski]

I work for Office Depot and they were testing apple pay over there yesterday, the guy said that apple pay is coming on October 15th.

 

[uwdude]

Walmart has either turned off their NFC readers, or deployed terminals without that functionality. They are claiming that "CurrentC" is their "alternative", when it is nothing of the sort. It doesn't even work with credit cards: you have to give them authority to debit your checking account. It's not NFC, anyway -- you have to install an app on your phone, and I suspect it is either Bluetooth or cellular/Wifi to do the authorization. I don't know Best Buy's excuse, but I suspect it is similar.

CurrentC is really a customer loyalty program, with payment capabilities grafted onto it. When you use it, all your purchases are tracked. With pay, the merchant doesn't even know your name and real credit card number.

Walmart and Best Buy are just spreading FUD to cover up the fact that they are backing the wrong horse. They'll figure it out eventually, when people refuse to give them the necessary financial information.

The problem is, and this is why Walmart and some others want their own solution, is because Apple pay defaults to the credit system (MC/V) instead of debit (punch in PIN number), which is what Walmart wants with their solution. See, if everybody starts paying with Apple pay, a MUCH higher percentage of transactions are suddenly going to be credit system based instead of debit, which means Walmart's merchant fees will go up substantially. It all goes back to the almighty dollar. That's why Walmart will fight it as much as they can, unfortunately.

 

[ptb42]

The problem is, and this is why Walmart and some others want their own solution, is because Apple pay defaults to the credit system (MC/V) instead of debit (punch in PIN number), which is what Walmart wants with their solution. See, if everybody starts paying with Apple pay, a MUCH higher percentage of transactions are suddenly going to be credit system based instead of debit, which means Walmart's merchant fees will go up substantially. It all goes back to the almighty dollar. That's why Walmart will fight it as much as they can, unfortunately.

That's a good point. With the MCX system, you have to give the merchant authority to withdraw from your checking account. Presuming that's done through the ACH system, it's a very low fee -- especially for someone with WalMart's volume.

It doesn't really matter to me, as I will still carry at least one credit card with me. It's just a matter of convenience for me. But, if someone that is explicitly avoiding pay gets breached and leaks credit card numbers, I'm going to make it a point to heckle them because they could have reduced the impact, but explicitly chose otherwise.

 

[miamidon]

Citi Bank

I am pleased to see that Citi is on board with Apple Pay. I can keep my existing airline miles cards, and tie them to iPhone 6.

 

[vomhorizon]

Note that wasn't just in the US. It was 10 million sold to users and retailers in 10 countries (including Japan where it's free on two year contract).

Of those 10 million, it's looking like 1 out of 5 to 7 sales are iPhone 6+.

Now, how many will be sold in a month? When the iPhone 5S/5C sold 9 million the first weekend last year, they ended up averaging 17 million a month. So there's a big burst at first, then it settles down.

At 10% more sales this year, we can predict that the iPhone 6 should sell about 20 million a month, of which 3 to 4 million will be the iPhone 6+. Let's give it the benefit of the doubt and say 5 million because of China.

Samsung also sold 5 million Note 3s in its first month. So phablet sales are probably comparable worldwide.

I think that you'll be surprised when the actual numbers come out (if apple decides to release the breakup of orders). The phone is still not available in China, and it seems that plenty of backorders exist for the 6+ that suggest apple does not have it in the quantity demanded. I expect many folks (know a few here in the states) to go for the 6 due to the delay in getting a 6+. Also expect the 6+ to sell in far more quantity in China compared to the 6 if apple can supply enough to feed the demand. By early October Apple should have enough time to catch up to demand for the 6+ and I expect them to show up in China with the proper mix of 6 and 6+. The opening weekend saw less than a dozen countries, while the most recent launch saw some 20 countries including the Gulf nations where I expect the 6+ to be the preferred device (if available in numbers).

I don't think that a first weekend bump from the 5 launch or the 5s launch is an indication of how sales will pan out either for the 1st month or the 1st quarter of full sales, but this remains to be seen I guess.

 

[miamidon]

MCX Exclusive?

Is it true that the retailers who use the MCX CurrentC debit system have an exclusive agreement to not use other wireless mobile payment systems?

It looks like 7-Eleven, Alon Brands, Best Buy, CVS Pharmacy; Darden Restaurants, HMSHost, Hy-Vee, Lowe’s Home Improvement, Publix Super Markets, Sears, Shell Oil, Sunoco, Target and Walmart are going with the MCX system.

 

[kas23]

That's what I understand to be a universal indication of NFC payments which leads me to believe the merchants specifically called out are just actively committing to NFC payment and since ive never seen NFC at Walmart theyre simply just refusing to adopt the tech period in favor of some other backwards wallet method no one will use. REALLY needs to clear up when this thing launches.

They will change though. Banks are shifting the fraud burden to retailers. That is, the onus will be on the retailers to prevent credit card fraud or they will be financially responsible. So expect retailers to double-down on stopping credit card fraud, which NFC will do. And my personal experience, whenever there is credit card fraud, it occurs at gas stations or Walmart.

 

[kdarling]

I think that you'll be surprised when the actual numbers come out (if apple decides to release the breakup of orders). The phone is still not available in China, and it seems that plenty of backorders exist for the 6+ that suggest apple does not have it in the quantity demanded. (...)

You could very well be right. I had expected a hit from the lower subsidies that the Chinese government had ordered, but now I see the China carriers saying they'll keep the higher subsidies on the iPhone, while lowering it on other devices.

Keeping iPhone subsidies changes my mind. We could easily see 2 - 3 million or more China sales the first week.

They will change though. Banks are shifting the fraud burden to retailers. That is, the onus will be on the retailers to prevent credit card fraud or they will be financially responsible. So expect retailers to double-down on stopping credit card fraud, which NFC will do.

To be more specific, "The policy assigns liability for counterfeit fraud to the party that has not made the investment in EMV chip cards (issuers) or terminals (merchants’ acquirers)." In other words:

• If the card owner was never given a chip card, the card issuer is still liable for in-person fraud, just as they are now.
  
• If the card has a chip, but had to fall back on magstripe because the merchant had not upgraded their terminal, the merchant is liable.

And my personal experience, whenever there is credit card fraud, it occurs at gas stations or Walmart.

At-the-pump contactless readers still have until 2017 to update in the US.

 

[uwdude]

That's a good point. With the MCX system, you have to give the merchant authority to withdraw from your checking account. Presuming that's done through the ACH system, it's a very low fee -- especially for someone with WalMart's volume.

It doesn't really matter to me, as I will still carry at least one credit card with me. It's just a matter of convenience for me. But, if someone that is explicitly avoiding pay gets breached and leaks credit card numbers, I'm going to make it a point to heckle them because they could have reduced the impact, but explicitly chose otherwise.

This is a good point too. Apple should really hammer home to these retailers and in commercials to the public just how secure Apple pay is, and the insecurity of the other solutions. This would really convince them to go with Apple pay.

Just customer convenience probably won't convince a company like Walmart, but if you demonstrate to them that their phone app debit solution isn't particularly any more secure than a mag stripe card, that will make an impact.

 

[freeskier93]

Yes, I see the extra security, but not why it matters... My credit card is insured. If it gets stolen, the money spent on it because the problem of the bank, not mine.
I have to read Apple's information in more detail, I don't know if Apple Pay will work without data.

Also, the cut Apple takes on the paiement means it will have the same problem as credit/debit card in Germany or Switzerland: shops won't like to use it. For instance, I have a friend who bought a sport card in Switzerland, the dealer drove him all the way to the bank to make the transaction in cash rather than accept any other kind of paiement...

Yes, and my car is insured, but I'm not going to leave the keys in the ignition and say "oh well, if it gets stolen insurance will take care of it". Not only is that risky but why ever want to deal with it in the first place?

As far as payment cut, I don't know how much of an issue that is outside of the US, but in the US it couldn't matter less. I've never ran into a place that doesn't take credit card. I have however been asked at a mom and pop general store way up in the mountains to pay cash for a bag of chips, but they would have still accepted my card if I hadn't had cash.

 

[kdarling]

The issuing bank (who services the credit account). A portion of the merchant fee goes to the payment processor, and the rest goes to the bank.

In exchange for the extra security, the banks are giving Apple 15 cents per $100, out of their fee.

Yep, very roughly it goes like this:

$100.00 : Customer pays this
- 2.00 : card issuer bank (0.15 to Apple)
- 0.10 : network
- 0.90 : processor / acquirer
======
$ 97.00 : merchant gets this after fees

Now, US counterfeit card-present fraud amounts were running about about 0.09% of purchases in 2012, so 0.15% seems high unless it's really risen since then.

Moreover, it seems dumb for the issuers to pay Apple anything, when everyone was moving to EMV for in-person anyway. So either the amount isn't as high as rumored, or maybe Apple blackmailed them by threatening to support MCX or something

OR... perhaps the full 0.15% only applies for card-not-present transactions, such as over the internet. Now THAT had a higher (~ 0.12%) fraud amount back in 2012, so if Apple could prevent that via device specific TouchId authentication, that would be worth it.

--

Another thing we don't know, is who is liable if an Apple Pay payment gets hacked. The best guess I've read is that Apple will have to give back the 0.15% they charged on that single transaction. But what if someone breaks the whole token scheme?

I think that's why Apple apparently went almost directly with the latest MC/Visa/Amex standards. That way, those companies are liable for any failure of their own methods. Apple is big, but they cannot afford the risk of being held liable either monetarily or in the public's mind.

 

[diipii]

This is a very clever ploy to access a huge amount of commission for not a lot of effort.

 

[oddnendz]

How do you find out if a store has gone with ApplePay or with MCX? I am only curious because of how this will effect my grocery shopping.

 

[JCrz]

Pos

Every time I see "POS terminal" I think "piece of s___".

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Yep, very roughly it goes like this:

$100.00 : Customer pays this
- 2.00 : card issuer bank (0.15 to Apple)
- 0.10 : network
- 0.90 : processor / acquirer
======
$ 97.00 : merchant gets this after fees

Now, US counterfeit card-present fraud amounts were running about about 0.09% of purchases in 2012, so 0.15% seems high unless it's really risen since then.

Moreover, it seems dumb for the issuers to pay Apple anything, when everyone was moving to EMV for in-person anyway. So either the amount isn't as high as rumored, or maybe Apple blackmailed them by threatening to support MCX or something

OR... perhaps the full 0.15% only applies for card-not-present transactions, such as over the internet. Now THAT had a higher (~ 0.12%) fraud amount back in 2012, so if Apple could prevent that via device specific TouchId authentication, that would be worth it.

--

Another thing we don't know, is who is liable if an Apple Pay payment gets hacked. The best guess I've read is that Apple will have to give back the 0.15% they charged on that single transaction. But what if someone breaks the whole token scheme?

I think that's why Apple apparently went almost directly with the latest MC/Visa/Amex standards. That way, those companies are liable for any failure of their own methods. Apple is big, but they cannot afford the risk of being held liable either monetarily or in the public's mind.

Excellent break-down. Good info here.