Neil Hughes
This week was the Money20/20 mobile payment conference in Las Vegas, Nev., and with over 7,000 people in attendance, the hottest topic at the show was the recent launch of Apple Pay and what it means for the industry.
J.P. Morgan analyst Tien-tsin Huang was in attendance at Money20/20, and provided a summary of the event in a note to investors on Thursday, a copy of which was provided to AppleInsider. At the conference, attendees were abuzz about Apple Pay, the recently launched mobile payment service from Apple available on the iPhone 6 and iPhone 6 Plus.
In particular, industry insiders view how Apple partnered closely with existing banks and credit card providers as a model for others to follow. Payment industry insiders view Apple Pay as a true "disruptor" that could have long-term ramifications for near-field communication-based payment terminals, and transactions in general.
Huang learned that Apple will bill and audit participating card issuers via the card networks, which serves to show how integral Visa and MasterCard are in the Apple Pay system.
Visa made it a point to highlight Apple Pay in a presentation by company vice president Ryan McInerney, who said that Apple's system is helping to reinvent the credit card number to work in the digital world. Specifically, he said the tokenization standard being pushed by Apple Pay will enhance security and improve transactions.
American Express Chief Executive Ken Chenault also said his company is excited about Apple Pay, noting that AmEx aims to be where its customers want to be, and consumers are excited about Apple's mobile payment service.
One card issuer that doesn't yet support Apple Pay is Discover, and its CEO David Nelms is taking a more cautious approach, saying at Money20/20 that adoption of Apple's service will take time. Nelms doesn't see a "world without plastic" traditional credit cards for at least a decade.
Overall, the industry has shown a "nervous enthusiasm" for Apple Pay, according to Huang. He said insiders believe Apple has the best opportunity to drive mobile payment adoption given its history of focusing on consumer experience, as well as its willingness to collaborate with banks and card providers.
"However, we heard healthy debate on how steep the adoption curve will be in the physical world (many were more bullish on Apple Pay's prospects for in-app purchases), given low merchant acceptance, and how bank friendly future iterations of Apple Pay might be as it gains scale," Huang said.
Still, payment industry members expect NFC chips will begin to spread more quickly with the upcoming switch to secure EMV cards in the U.S. The so-called "chip-and-signature" switch will be accompanied by new terminals at merchants, and payment industry experts expect that many merchants will opt for NFC-capable terminals when they upgrade.
"Many are watching how consumers embrace Apple Pay with limited merchant acceptance, understanding that merchant adoption of NFC will require consumers to demand it," Huang said.
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Andrew O'Hara
Amber Neely
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Malcolm Owen
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Charles Martin
42 Comments
And CurrentC was sitting in the corner comparing themselves to the iPhone.
Another dent in the universe.
If this is how Discover does business, I known why I never hear about them anymore.
[quote name="AppleInsider" url="/t/183283/apple-pay-dominates-discussion-at-money20-20-mobile-payments-industry-conference#post_2635749"]This week was the Money20/20 mobile payment conference in Las Vegas, Nev., and with over 7,000 people in attendance, the hottest topic at the show was the recent launch of Apple Pay and what it means for the industry.[/QUOTE] I'm guessing it's the highest antecedence they've ever had, not to mention Money20/20 is now something more than 7,000 people have ever heard of. I wonder who is indirectly responsible for all of that? [QUOTE]In particular, industry insiders view how Apple partnered closely with existing banks and credit card providers as a model for others to follow. [/QUOTE] 1) Apple can't stop others from doing the same thing, save for any exclusivity agreements with the financial institutions and multinationals, but I have a feeling Apple under Cook wouldn't do that for [I]this[/I] service. 2) Historically, the areas are pinnacle to Apple's success are the things their competitors don't care about copying (i.e.: customer service and user experience), but I hope they copy this service because we're all better off with more places accepting NFC so we all forego physical cards as soon as possible. [QUOTE]Payment industry insiders view Apple Pay as a true "disruptor" that could have long-term ramifications for near-field communication-based payment terminals, and transactions in general.[/QUOTE] Long-term, yes, but the customer and banks will benefit. Only MCX and thieves (oops, I said thieves twice¡) see ?Pay as a problem. [QUOTE]One card issuer that doesn't yet support Apple Pay is Discover, and its CEO David Nelms is taking a more cautious approach, saying at Money20/20 that adoption of Apple's service will take time.[/QUOTE] I think his outlook is so myopic that he should only be allowed to be at conference called Money 20/200, but if Discover waits a year it's not going to hurt them or ?Pay. [QUOTE]Nelms doesn't see a "world without plastic" traditional credit cards for at least a decade.[/QUOTE] Not with that attitude! [QUOTE]Overall, the industry has shown a "nervous enthusiasm" for Apple Pay, according to Huang. He said insiders believe Apple has the best opportunity to drive mobile payment adoption given its history of focusing on consumer experience, as well as its willingness to collaborate with banks and card providers.[/QUOTE] That's understandable considering how many failed attempts there have been, all of which were trumpeted. I saw every single one of those as flawed, described how I think a mobile payments solution should work, and that's what Apple implemented, but that's me. I think by next year there will be very few people that still can't see how an ?Pay-like solution is the future. [QUOTE]"However, we heard healthy debate on how steep the adoption curve will be in the physical world (many were more bullish on Apple Pay's prospects for in-app purchases), given low merchant acceptance, and how bank friendly future iterations of Apple Pay might be as it gains scale," Huang said.[/QUOTE] A learning curve is a 2D graph that uses time × experience or experience × learning to indicate the time one gets to a plateau or particular level. The more steep the curve the sooner it arrives. This is not the same as a steep hill which would be more difficult to ascend than a gentle hill. In this case, a steep adoption means adoption on the y-axis and time on the x-axis. With adoption being steep he's inadvertently stating adoption will be quickly. I agree. PS: One thing I didn't expect to be good for ?Pay was the drive-thru. They have to bring the NFC-capable card swipe machine out of the window, but if my wallet is in my pocket and my phone is still on the console it's much easier to grab my phone.
[quote name="SolipsismY" url="/t/183283/apple-pay-dominates-discussion-at-money20-20-mobile-payments-industry-conference/0_100#post_2635778"] PS: One thing I didn't expect to be good for ?Pay was the drive-thru. They have to bring the NFC-capable card swipe machine out of the window, but if my wallet is in my pocket and my phone is still on the console it's much easier to grab my phone.[/quote] I thought McDonald's was going to start making drive thru NFC easier, but haven't heard anything yet.