Tag Archives: Retail

Dumb pipes and Wide moats: Networks and Tokens

For Apple Pay, tokenization is the process by which card information is protected and subsequently shielded from the merchant and other parties in the transaction flow – till it reaches an entity equipped to reverse the translation and submit the authorization for bank approval. With AP – this role is entirely owned by the card schemes, even though the specification put forth by EMVCo places no such stipulations and allows third party “Token Service Providers” to exist. Apple is said to have welcomed “non-card scheme TSP’s” to operate within Apple Pay for a couple of reasons – the ability to support non-payment tokens as well as a hedge against putting all its eggs in one basket. For network TSPs like V and MA – tokenization represents a real advantage that dis-incentivizes disruption, while opening their rails to far more potential than just payments. Continue reading

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Digging a wider moat: Apple shifts to loyalty


Apple eschewed banks for a retailer focus onstage at the WWDC when it spoke to payments. I sense this is an intentional shift – now that stateside, you have support from all four networks and all the major issuers – Apple understands that it needs to shift the focus on signing up more merchants, and everything we heard today drove home that note. That includes Square’s support for NFC, as well as the announcements around Kohls, JCPenney and BJ’s. MasterCard’s MDES (opposite Visa’s VTS) is the tokenization service that has enabled these partnerships – specifically through MA’s partners such as Synchrony – their press release linked – (former GE Capital) which brought on JCPenney, Alliance Data which brought on BJ’s, and CapitalOne which enabled Kohls. Continue reading

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Apple Pay and MCX – Misunderstood dynamics

When BestBuy chose sabre-rattling and reject Apple Pay from its stores, it made little sense that it will reduce its righteous anger to be about something that is transitory – as the state of a radio on a phone. And now that NFC has found a path to acceptance in BestBuy’s own payment terminals – we can put that chapter behind us. And treat it as the correct decision from a merchant, whose future on a quarterly basis is entangled with the products it sells on behalf of Apple. As Apple experiments with the highly personalized and curated retail experiences of products like the Watch, it is important for channel partners like BestBuy to appear to be more aligned than before, to smooth over any appearance of a conflict. Continue reading

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Apple Pay : What happens when it hits 100%


What happens when Apple Pay hits 100%? I am not talking about 100% merchant acceptance, as much of that is driven by an alignment of merchant interests – cost reduction, potential for increased sales and marketing etc. Instead, I am talking about coverage – the share of total available cards across US banks that can be provisioned into Apple Pay. Today, partly due to the diligence of networks in signing up banks for AP, cards that are responsible for 90% of total retail payment volume are now ready to be provisioned. Separately, I am told 90% of issuer portfolios will be tokenized by end of 2015. (Forget/Ignore Private Label and Discover, for the moment) Continue reading

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Why do Merchants hate NFC?

Through all the rather “invented conflict” of MCX vs Apple Pay by the tech media these last few weeks – very little diligence was done on why merchants have come to reject NFC as the standard of choice. Maybe I can provide some color here – both as to why traditionally merchants have viewed this channel with suspicion leading up to CurrenC choosing QR, and why I believe its time for merchants to give up hating on a radio. Typing this up on my iPad, so excuse any lack of editing on this one.

Why do merchants hate NFC? Continue reading

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Apple Pay: First Observations And Closing Thoughts

If rumors hold true, Apple Pay will launch in a week. Five of my last six posts had covered Apple’s likely and actual strategy in payments & commerce, and the rich tapestry of control, convenience, user experience, security and applied cryptography that constitutes as the backdrop. What follows is a summation of my views – with a couple of observations from having seen the Apple Pay payment experience up close. About three years ago – I published a similar commentary on Google Wallet that for kicks, you can find here. I hope what follows is a balanced perspective, as I try to cut through some FUD, provide some commentary on the payment experience, and offer up some predictions that are worth the price you pay to read my blog. Continue reading

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From Chip to NFC: A necessary evolution

Consider this: Over its Sept 19th launch weekend, Apple has effectively shipped over 10 million EMV cards. Maybe these weren’t actual cards – rather, containers that could end up being a host to over 80M issuer cards eligible for Apple Pay. So how many among those will knock on a retailer’s door at launch? Initial device sales are to a loyal fan base. Should be easy to guess. Should be easy to spot too, as the aggregate NFC payment volume in US has never been more than a whimper. Continue reading

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The diminishing aura and utility of Coin


Much has been written of late, about Coin and its peers. Coin, Loop and others are worthy emerging players who have focused on innovating on the edges of the current payments framework – and consider convenience a more lucrative goal vs disrupting it altogether. Despite bank’s aversion to having their brands wrapped by a 3rd party – Coin and its peers have much consumer support. I have little to say about the product as-is – I think it’s a sexy widget, but for me – I am too cheap to pay for a plastic replacement when I carry around one already. However I believe they are intentionally evasive when it comes to their respective roles in an EMV landscape. Much of that follows focuses on Coin, but really – applies to Loop and others as well. Continue reading

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Apple in Payments: Bluetooth Edition


This is the Part II of my Apple in Payments take – and it’s early because of the leak last week around Apple’s MFi program. In the first half of my take, I had touched upon Apple’s program for 3rd party hardware attachment market as being significant and likely to be a key aspect of its payments approach. So below, I will cover more on the approach, how Bluetooth will be the standard of choice – not NFC, and how Apple plans to secure Bluetooth enough to be able to handle payments. Continue reading

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Tokens and Traditionalists

Stop-Hating_1066824Two recent comments led to this post. One is by David Marcus of Paypal who long held fast to his belief that NFC based payments had high barriers to entry – cost, complexity while offering very little upside. Paypal’s position on NFC (Not For Commerce) had always been a bit zealous – understandable as in a world of Secure Elements – Paypal (and many others) could not meaningfully participate. But Marcus’s recent post is an attempt to view NFC/HCE as one of the three trends that could transform the retail payment experience – is a pragmatic view to a complex and heterogeneous retail environment. Marcus speaks on how Paypal has come to adopt a cautiously optimistic view of NFC/HCE, now that there are no gatekeepers extracting a toll and because HCE (thanks to SimplyTapp) finally offers a level playing field in the Android ecosystem. Continue reading

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