Payments Ecosystem

A game changer for Apple Pay rivals that have for nearly a decade have been pushing Apple to open its tap-and-go services for inclusion. Players from down under Australia to US to EU have long challenged Apple for its inclusion of other rival providers. And whilst the current proprietary network has served well in building leadership, this change will change the landscape significantly. 

Apple can benefit by driving greater revenue in opening it services post this EU offer conclusion by 1. charging a fee to use the service; and 2. through increased transaction volume; and 3. having users of rival players to likely convert to more Apple financial services offerings ..  draw more consumers that benefits the larger Apple ecosystem. 

Recent news publications have reflected the conundrum Apple faces in its partnership with Goldman Sachs and its impact to the Finance Services(FS) model that hinges upon this important relationship. Is it in peril? How will Apple exit keeping its consumer base gleefully happy unaware of this noise? Where does this lead to for Apple in next 2 years as the MasterCard partnership agreement comes to an end too? 

Apple's FS leader, Jennifer Bailey, can explore targeted spectrum of strategic activities including 1

. Given the current Federal hikes there is good opportunity to purchase(acquire) a bank (small) for license with capability in cards, savings, checking, insurance (health) products, and Wealth - create pathway for further expansion to FS products;

2. Banking license and a targeted acquisition (even banks with $50 to $100b in assets) will free it from wrangling of underwriting, fraud, KYC and reporting;

3. continue to expand developing in-house capabilities as it has executed with rewards, underwriting, credit management; 

4. card / payment processing using modern issuers like Marqeta, SoFi are partnerships to develop without giving up the interchange that it never paid Goldman per contract

5. servicing through a premium provider using in-house tools 

Given Gen-Z's over the next 4 years will be establishing more than 4 million banking accounts and seeking new additional FS products - giving the traction over the past decade from wallets to Apple Pay to Apple Cash to Apple Card to Apple Later to Apple Savings ... growth in health insurance, and wealth will be key whilst steering the Apple Car Play engagement growth! 

Apple's much awaited savings account is now available to Apple Card holders.Industry impact - a very attractive rate of 4.15%, better than most CD rates in the market with a lock-in period for 8 to 12 months; depositors are shopping for better rates, leading to movement to greater competition to both established large banks and Neo-banks. For Apple a great ramp to increase services revenues from payment post the recent BNPL offering! 

#EmbeddedBNPL is here! BNPL has its headwinds with - Fintech latest valuations with the likes of Klarna, Affirm reflect current market environment; Fed raising market rates in high-inflationary environment - cost of credit for BNPL players; Regulation is coming to BNPL... yet there is opportunity.

BNPL market, per some researchers, will grow $250B+ in 5 years and the tailwinds - Consumers (especially GenZ's) want instant gratification; creating differential financial experiences; Brands want it to create unique buying experiences. 

Apple Card issued by Goldman Sachs.. die hard Apple users will get the numbers rolling with its titanium look and etching. The rewards program is not the best, yet will offer cash back and deliver on privacy. Great foray for GS to make inroads post the start-up acquisition to offer this product! 

Samsung to launch 3 full-scale stores in US on 2/20 along with the Galaxy S10 launch! 

Attain, the new health app in partnership with Apple! Partnerships to aid future services revenue for Apple. 

Apple to end LCD screens currently used in XR models by 2020 leading to potential sale of Japan Display to investors in China / Taiwan! 

Kate Spade and Michael Kors are feeling the pinch from Apple Watches that have GPS, HR monitors and payments! The new versions of watches will fend off against Apple watches with Google Pay as NFC payment option. 

Curious to see how many Kate Spade and Micheal Kors customers have an Apple Phone.. it will create confusion for customer use watch to pay (with Google) or Apple iPhone?? Apple has 77% of the debit card trx in US market. 

Starbucks makes a move to improve the customer experience with reloading directly from Apple watch! 

Apple ecosystem P2P payment service launches with Green Dot providing the virtual Apple Pay Cash card. P2P payments even through on Apple devices, will compete with Zelle, Venmo, and Square Cash. 

CBA, NAB, Westpac and Bendigo petition ACCC to allow Apple allow NFC capabilities be extended to own payment wallets in addition to ApplePay. A judgement in favor of banks will allow banks in other countries to follow similar suit, which will end ApplePay's current restrictions to support only ApplePay. The new world you might end up having GooglePay or SamsungPay on Apple phones. 

This does also open the dialogue around banks allowing Fintech sector to access customer information through API's are customer request, very similar to PSD2. 

As the mobile payment market matures, we will see regulators requiring banks to have open API's and also Apple to open its iOS to allow other wallets be added for NFC usage. 

Aussie banks petition to ACCC over opening up Apple for allowing other wallets to use NFC on Apple phones. This will open the debate around bringing PSD2 to Australia with open API's that Fintech companies require to access consumer data currently protected within the banks. This battle over anticompetitive nature of ApplePay might be good for consumers as legislation like PSD2 equivalent makes its way to Oz. 

Meet HuaPay (might be HuPay) - competitor to ApplePay in NFC transactions using mobile phone in its recent CUP partnership. HuaPay phones with fingerprint scan and NFC chips for tap and go eperience. Alipay and TenPay dominate the mobile payments space though their solutions are QR based for retail and have dominant presence in on-demand services with Alipay holding 70% marketshare vs. 19% for TenPay. 

Samsung Pay will appear in the China market soon, was slated for early 2016 in China and Honh Kong. 

Andriod Pay preps for UK market where Andriod has 54% of market. UK consumers are high contactless uses and a transition to Andriod Pay will be a lot faster than experiences in US. Barclays continues to steer away from other Pay solutions in favor of its own! 

Much awaited Touchid for safari users will be enabled soon. Very similar to in-app purchases web purchase experience will be enahanced similar to in-app expereince. 

PayPal's One-touch solution has 18 million customers and a million merchants with a significant advantage of being mobile operating system agnostic!