Banks desperately need Apple Pay to blow up

Apple Pay may prove to be one of the most important products Apple has launched in years. While it might not currently receive the same attention as the iPhone 6 models and Apple Watch from consumers, it certainly is an important move for the company. It turns out that banks may be anxiously waiting for wireless payments to finally take off, seeing Apple as the kind of company that can make it happen, a New York Timesstory reveals.

Even though banks accepted to charge lower rates for Apple Pay transactions, they may make up lost revenue by seeing a significant increase in transaction volume as more consumers start using Apple Pay. Furthermore, Apple’s security measures behind Apple Pay are other features that could help banks save money in the future, by reducing fraud-related costs that appear in Target and Home Depot-like attacks.

A partnership with Apple also helps financial institutions stay relevant and defend their role in the payments ecosystem, as they face competition from other companies and even merchants that seek to replace card networks.

The Times also provides some interesting details about the negotiations between Apple and banks and financial institutions, concluding that “banks did it Apple’s way” when it comes to Apple Pay.

The iPhone maker entered serious talks about the upcoming payment system in January 2013, insisting upon utmost secrecy about the project, and banks closely guarded that secret. iPhone 6 leaks offering NFC-related leaks have mostly detailed hardware sightings and speculations on Apple’s entrance into the mobile payments business.

The name of Apple’s product – Apple Pay – was not leaked before the event, and it turns out that even banks were not aware of it. Furthermore, banks didn’t even know what kind of devices will support the new payment system, leaving blank spaces in marketing materials pending Apple’s announcement.

At JPMorgan, only about 100 of 300 people working for Apple Pay actually knew that Apple was the partner they were working for. The company actually had an event scheduled at the same time with the iPhone 6 announcement, and was able to mention Apple Pay only when one of JPMorgan CFO Marianne Lake’s deputies took out a green apple of her bag to signal the CFO that Apple announced the product. A stream showing Apple’s event was actually aired at JPMorgan’s headquarters in New York, without being able to explain, at least at first, why Apple’s iPhone show was on.

Similarly, Visa chose to use the name of “another consumer electronics company” instead of Apple for those employees that were not on the project – eventually, Visa’s Apple Pay team amounted to about 1,000 employees.

Meanwhile, Apple used codenames internally for the banks and financial institutions it dealt with, in order to prevent leaks. Furthermore, the company did not disclose to any of the banks it worked with what other banks are on board the Apple Pay initiative.

Apple is also in negotiations to launch Apple Pay in Europe, and the service should also be available in China in the future.

SOURCE:

THE NEW YORK TIMES