Just about a week ago on September 9th 2014, Apple introduced its new Apple Pay payment solution for the iPhone 6 and iPhone 6 plus. The payment solution comes with a range of features that would make shopping on your mobile phone that much more convenient.
At the same media launch, Apple announced that they were partnering with various companies and organizations ranging from credit card companies and banks that issue cards, to retailers across the United States. However, several organizations including Walmart and Best Buy were quick to deny any plans to support Apple Pay.
Apple Pay and the use of NFC
The Apple Pay platform relies on a technology called NFC which stands for near field communication. NFC is a set of communication standards that enable mobile devices to establish radio communication with each other by touching them together or bringing them into close proximity of just a few centimeters. NFC has been in the market for some time now but has failed to gain enough traction so far. Less than 10% of the merchants have NFC readers according to an article in the Wall Street Journal.
Smaller merchants in particular have been unwilling to install the devices due to the cost of the devices, low use by consumers and the merchant fees for mobile-payment being much higher than that of debit cards.
Walmart opts for MCX
Walmart and Best Buy have instead opted for MCX or Merchant Customer Exchange, a technology group that focuses on providing mobile solutions. The MCX payment solution requires only a software download and can be used on existing smart phone devices including iPhone and Android. Apple Pay works for the iPhone 6 only. It is not hard to see why the big retail giants may feel like they do not need it.
MCX further plans to launch a mobile payment wallet in 2015 called CurrentC which will link checking accounts, gift cards and selected accounts. CurrentC will use QR codes rather than NFC.
Apple Pay’s Gamble
Apple however is undaunted. It turns out that there may be a method to all of this. Regulatory changes expected in 2015 will compel all merchants to install new payment hardware that supports EMV cards. EMV cards make it possible to have point of sale authentication and help prevent fraud. Merchants who do not upgrade their hardware by October 2015 will be held liable for the fraudulent use of counterfeit, lost or stolen cards.
Apple’s decision to introduce Apple Pay at this point now begins to look very well timed. Merchants have little choice but to upgrade now so as to support EMV cards. It may well be that merchants may choose to include NFC capabilities in their hardware upgrade, something that would work in Apple’s favor.
Less Monopoly is More for Bitcoin
Apple is starting to look more like a big machine that tries everything to get monopoly and create a closed in-house economy, rather than being the innovative start up that had pirate flags on top of their corporate buildings. The real fear is that Apple may be successful in creating a monopoly when it comes to mobile payments, creating higher fees and tracking your every move. It’s unfortunate, but most people do not seem to care. Most people just want to use the most convenient service, not thinking about the backend nor company behind. It’s good that Apple Pay has a lot of competition (Google Wallet, MCX and so on) which will ensure at least an oligopoly, even though I would have preferred perfect competition.
The less control a single company has, the more opportunities Bitcoin will get.
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