Apple Acquired Mobeewave, a Startup That Lets Smartphones Accept Payments Using NFC

[DailySlow]

Soooo great . Apple and a Canadian company located in Montréal. 😀

Celebrate the news at McKibbons pub.

 

[Vanilla35]

Didn't apple add an NFC chip to the iPhone 5+ years ago? I thought this has already been possible. Am I missing something here? I had always just assumed they were taking a pass on this feature for some reason.

 

[tmiw]

That’s not the problem in developing nations. Most of the payment terminals already in use in those countries do have NFC built in, they just have it switched off via software. The main reason why Apple Pay hasn’t expanded to those countries is that the local banks are very unwilling to pay Apple’s fees. And Apple usually does not negotiate. Apple just lays out their conditions and if the other party doesn’t agree 100%, then there is simply no deal.

This assumes they actually did make offers to said banks.

Also, in countries that still use cash significantly, there might not be many terminals to even enable NFC on in the first place.

 

[lartola]

This assumes they actually did make offers to said banks.

Also, in countries that still use cash significantly, there might not be many terminals to even enable NFC on in the first place.

They did make offers to the banks, I heard that from people who work for the banks. It just didn’t happen before 2018, four years after the initial launch of apple pay, and when it did the banks refused to pay apple’s fees. The amount of NFC terminals is not too relevant: Apple Pay launched initially in the US with only 3% of the merchants having NFC capable payment terminals (most of them still had magnetic stripe readers only, not even chip).

Then there’s the issue, I just learned, of the way payments are processed in each country. In Mexico, for instance, it’s a closed circuit: the local banks don’t have a direct connection to the major international card networks such as Visa, MC, etc. Instead, all card payments are routed through one of two existing local payment processors, who will in turn route the payment either directly to the card issuer for authorization if it’s a domestic card or to Visa, MC, etc if it is a foreign card. These local payment processors also participate in payments made abroad with mexican issued cards, which are routed through the major networks to the local processor in Mexico and then to the card issuer. This ”man in the middle” scheme creates a problem for implementing the use of mexican cards with apple pay and other NFC based mobile wallets because the tokens generated by those wallets are only good for use on the major international card networks, but cannot be recognized by the local payment processors’ networks. And this kind of closed system is still used in many other countries too, not just in Mexico, which means pretty much the whole payment system would need to be modified for apple pay or similar, and that would be a major factor that makes apple pay have to wait longer before it can finally arrive to some countries.

Fortunately for Mexico, however, Visa and MC are finally being allowed to process payments locally, so it will be just a matter of time before we start seeing apple pay in the country (in fact, one bank is ready to support it but it’s a small one, and seemingly apple is waiting for one of the major banks to join in in order to give it the green light).

 

[tmiw]

They did make offers to the banks, I heard that from people who work for the banks. It just didn’t happen before 2018, four years after the initial launch of apple pay, and when it did the banks refused to pay apple’s fees. The amount of NFC terminals is not too relevant: Apple Pay launched initially in the US with only 3% of the merchants having NFC capable payment terminals (most of them still had magnetic stripe readers only, not even chip).

The US was also in the process of switching to the chip at the time, which necessitated hardware upgrades at places that already accepted cards. Apple made the bet that merchants wouldn't cheap out if they saw a use case for contactless and it looks like it paid off (even though it ultimately took 5+ years for merchant adoption to reach 70%+).

Meanwhile, in some places that don't really use cards at all, the adoption of CC terminals in general might be a hard sell, even if in all likelihood they'd come with NFC turned on from the start. That's where the ability to accept NFC payment from a phone really helps.

Then there’s the issue, I just learned, of the way payments are processed in each country. In Mexico, for instance, it’s a closed circuit: the local banks don’t have a direct connection to the major international card networks such as Visa, MC, etc. Instead, all card payments are routed through one of two existing local payment processors, who will in turn route the payment either directly to the card issuer for authorization if it’s a domestic card or to Visa, MC, etc if it is a foreign card. These local payment processors also participate in payments made abroad with mexican issued cards, which are routed through the major networks to the local processor in Mexico and then to the card issuer. This ”man in the middle” scheme creates a problem for implementing the use of mexican cards with apple pay and other NFC based mobile wallets because the tokens generated by those wallets are only good for use on the major international card networks, but cannot be recognized by the local payment processors’ networks. And this kind of closed system is still used in many other countries too, not just in Mexico, which means pretty much the whole payment system would need to be modified for apple pay or similar, and that would be a major factor that makes apple pay have to wait longer before it can finally arrive to some countries.

That seems like a problem with the local card network and not necessarily with Apple itself. After all, Interac supported it relatively early on.

Fortunately for Mexico, however, Visa and MC are finally being allowed to process payments locally, so it will be just a matter of time before we start seeing apple pay in the country (in fact, one bank is ready to support it but it’s a small one, and seemingly apple is waiting for one of the major banks to join in in order to give it the green light).

Here's hoping AP finally comes there due to that news. However, I would think that enabling it just at that smaller bank might be enough on its own to get one of the larger ones to soon follow.

 

[jonnysods]

NFC-based credit cards and payment systems already exist. It's not clear from the article if this company offers anything new or not.

I was thinking Apple would make it work without something plugged into the iPhone or iPad, I know there is a slew of payment processors that work on iOS.

 

[lartola]

That seems like a problem with the local card network and not necessarily with Apple itself. After all, Interac supported it relatively early on.

That’s exactly what it is. The networks of the local payment switches, Prosa and E-global, would not be able to handle the tokens generated by Apple Pay since those tokens are intended for the Visa and MC networks. That’s why the lack of a direct connection between the banks and Visa/MC poses a problem for enabling apple pay for use with cards issued in Mexico. Technically the payment switches could just route the payments to Visa/MC just as they do with foreign cards, but that would likely be too costly to do it that way due to the amount of domestic card payments being routed.

 

[ttyRazor]

if you are in the US.

No reason to expect this wouldn’t also be geographically limited.