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15 AUGUST 2016
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Tuesday, 11 August 2015 14:31
Apple Pay latest figures, partners and consequences
    * Rush to launch from competitors
        * Banks begin massive IT investment
            * Latest partnerships for Apple Pay
                * Apple Pay satisfaction surveys - is it good PR?

                  As the EMV ramp up gathers pace in the US, so the Apple Pay marketing machine is going up a gear in newly rolled-out London. One of the consequences of Apple's launch (finally) into payments is that everyone else has been kicked into action, resulting in a rush of mobile payment announcements.

                  Samsung is working fast on its launch with MasterCard (while Visa basks in the reflected glory from its association with Apple Pay), Amex has put Apple Pay on its corporate cards, to ensure that high spending execs can use their iPhones when travelling and entertaining, and Zapp is using the fear of being left behind to bully UK banks into putting their differences to one side, signing their agreements and getting on with the roll-out of this bank to bank payment method

                  Early teething problems for Apple Pay
                  It wasn't a trouble free launch for Apple Pay in the UK. In fact some would say it was decidedly low key.

                  HSBC, and its First Direct side kick were not ready for the launch, but Barclays came on board at the last minute in terms of agreeing acceptance. This will be half hearted, as Barclays is a long way down the road of launching bPay, its own branded mobile payments on a wearable, and of course there is Barclays PingIt for P2P payments.

                  Also in competition are Google with its Android Pay replacement for the less than successful Google Wallet, and the PayPal wallet, its latest attempt to get mobile payments accepted by its customer base.

                  Facebook has a buy-button now on its pages, so it wouldn't surprise anyone if it launched a wallet sooner rather than later.

                  Tech companies versus banks
                  Much is said about whether the technology companies are proving a threat to banks. Historically, banks have been adept at watching, waiting, and they buying into the high adoption area, to take over the new offering and consume it. The difference with mobile payments is that some of the technology competitors are bigger than the banks, so this might not be as easy as buying up a startup. However, the Apple Pay model demonstrates that one company at least has decided that working with the banks and card payment companies is more beneficial than trying to fight them.

                  Which gets us back - once again - to customer data analytics. This is one area that banks do ridiculously badly, despite the fact that they have mountains of information. The technology companies, on the other hand, do analytics impressively well. Many of them, and especially Apple, do customer service and user experience enviably well too. Banks simply cannot compete currently in these areas.

                  To improve, the banks need to sort out their legacy IT systems, bring in teams of analytics experts, beef up their customer care departments to improve satisfaction scores, and change their attitude to the use of customer data for analytics. Whether banks are able to make this massive mind-set change will determine whether or not they win the fight for mobile payments domination, or whether the technology companies do.

                  In the past, banks have always argued that they are chosen  by consumers as partners for financial services because they are more secure and trustworthy, but since 2008, and the financial crash, their trustworthiness has been severely tested. A number of data issues, and the technological failures experienced by RBS and Natwest have cast doubt on their security and competence too. Which leads people to question whether the technology companies are really that much less reliable?

                  Banks have committed to a spend estimated to be in the region of  $200 billion to update their systems and integrate their various departments and divisions. The goal, as always is to reach a 'single view of the customer' which then unlooks their treasure chest of data for analysis. Existing IT methodologies make it complicated or near impossible for banks to extract all data relating to one individual customer, because it was stored in various applications found in different business units. Naturally risk-averse banks remain scared of literally breaking the bank attempting to improving customer service.

                  Identity crisis

                  Traditional banks have many competitors these days and the investment and focus on new ways of doing business are well overdue. The CEO of BBVA bank, Francisco Gonzalez the largest in Europe, said recently that he no longer viewed his company as a bank, but as a digital organisation which is telling. With customers viewing the world through their mobiles, and seeing branches as somewhere their grandparents visit, delivering a value–added omni–channel experience is crucial. Learning from customers is not a 'nice to have' either, it is essential.

                  It shouldn't be that difficult to construct a technology infrastructure which connects all data silos, and gives account managers one whole view of the customer relationship. Unless you work for a legacy bank. For the new technology companies, it is a no-brainer. They are already achieving a single view of the customer.

                  The impact  of loss of reputation and creaking systems (that make it impossible for banks to notice important customer triggers such as when a customer is getting ready to leave) is being felt. Research estimates that the Big Four UK banks have already lost at least 250,000 customers already this year.

                  Recent legislation to make it easier for customers to switch providers if they find a better deal has helped. The loss of reputation of the legacy banks together with the attractiveness of new players is providing the driver. So far, the organisations gaining customers are the new banks, such as First Direct and Metro. Soon it may be Apple, Google or someone else we haven't heard of yet.

                  A round up of the latest Apple Pay news

                  Another day, another credit union
                  Apple Pay has linked with yet another credit union, as it expands its partner base.
                  Bellco — the credit union based in Colorado with 21 branches, more than 250,000 members and as much as $2.9 billion in assets — said it would begin to accept Apple Pay during August.

                  In the release announcing the partnership, Doug Ferraro, who serves as chief executive officer of Bellco Credit Union, confirmed the Apple Pay marketing message: “Not only is Apple Pay simple and convenient, but it also adds a layer of privacy and security to making digital or in-store payments.”

                  The companies said that instead of using Bellco credit or debit card numbers to make a payment — and in an effort to bolster security — Apple Pay assigns the Bellco customers a unique, encrypted Device Account Number. Under that practice, credit and debit card numbers are not in fact stored on devices or on Apple’s servers.
                  The Device Account Number, augmented by a transaction-specific dynamic security code, helps process the payment between the buyer and the seller. Nobody on the “seller” side of the transaction, including the cashier, sees the Bellco/Apple Pay user’s name, code or card number, the release stressed.

                  Apple Pay has added roughly three dozen new U.S.-based financial institutions, including banks and credit unions, which brings the total tally of “participating banks” to more than 375 entities.
                  Apple’s smartphone-based payments service, newly available in international locations, has been available in the United States since Oct. 2014.

                  Amex activates Apple Pay on corporate cards
                  AmEx’s Global Corporate payments division has agreed to activate Apple Payon its US Corporate Cards.

                  Through its Global Corporate Payments division, American Express offers a suite of B2B and T&E payment solutions that deal with organizations’ streamline processes and focus on savings and efficiency.
                  “Businesses today are going digital,” said  Greg Keeley, Executive Vice President, Global Corporate Payments, American Express. “We continue to invest and expand digital offerings for our corporate customers in ways that maximize security and enhance the user experience.”
                  Apple Pay allows American Express Card Members to add their eligible Corporate Card and pay with their mobile devices at contactless merchants in stores, or within participating apps that accept American Express.

                  Apple claims watch satisfaction at 97%

                  Few companies achieve higher customer satisfaction than Apple, but its latest claim, that 97% of customers are very happy with their new wearable is staggeringly high.

                  The company says that Apple Watch customer satisfaction outpaces original iPhone and iPad figures for this stage of ownership.
                  Of the more than 800 Apple Watch owners surveyed by Wristly, 31% said they were "somewhat satisfied" while 66% were "very satisfied/delighted." In comparison, just 91 percent of iPad buyers and 92 percent of those who picked up first-generation iPhones were satisfied with their purchase.

                  Casuals are happiest
                  Casual users seem to be the most at ease with the Apple Watch, as 73% of survey respondents who do not work in technology reported being "very satisfied." That number drops to 63% for so-called "tech insiders" and 43% for developers.

                  Most also believe the Watch to be good value, with 73% saying that the device is worth what it costs. 14% think the Apple Watch is worth more, while 12% rated it a poor value.

                  Value perceptions
                  Interestingly, Wristly says that its analysis indicated a gulf in perceived value between owners of the stainless steel Watch and the sport version, with stainless steel owners generally believing the device to be a better value.

                  Apple is expected to reveal some additional data about the Watch's first months soon, but sales figures will not be broken out in detail.
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