"If Apple can revolutionize the point of sale, consumers will use their iPhone for retail checkout." That is the trick, isn't it?
"In the process, I think they will come to own a huge chunk of the payments industry," says Koploy. "We think Apple has a chance to own the later opportunity by acting as a merchant services provider."
"Consumers won’t care who’s processing the transaction or earning fees," he argues. It's true that consumers won't care. But retailers will care, as well the existing issuers of credit cards and debit cards, as well as the card associations, especially Visa and MasterCard.
From the outside, it always seems to be logical that a new provider, offering a new experience, ought to be able to change the payments experience. Starbucks perhaps is the best current example of that, in a retail setting.
But consumer desire, though necessary, is not sufficient to drive a change, as it is the retailers who also have to decide such a change in technology and experience benefits them as well. In the past, modifications of the point of service terminals have run as much as $200 per terminal, a capital investment retailers would rather not make.
The other issue is whether any new payment scheme can offer lower transaction costs for retailers. Apple might hope to do so, but has to be aware that the issuing banks and payment networks are not going to stand idly by and allow Apple to erode current industry revenues.
Apple has to be considered one of the more fearsome potential disruptors. But disruption in the payments industry is far harder than it typically appears.
Some of us might guess that Apple could play a bigger role not in the actual payments revenue stream, but as a provider of new value to ecosystem participants. In other words, Apple's biggest success could come not as a replacement for current methods, but as a partner to most of the ecosystem, including end users, retailers, banks and settlement networks.
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