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iPhone, NFC & Apple Pay: How Should Banks React

  • Author:Martin Cox
  • Release on :2014-11-04

After years of speculation, Apple has finally revealed its mobile payments strategy: Apple Pay. This is good news for (U.S.) iPhone users who want to ‘tap to pay’, but what about the majority of smartphone users who are using an Android device? What about those of us outside of the U.S? And what about the banks who want to offer a solution to a wider demographic?

Contactless EMV acceptance

Banks should note the merchants listed under “Use Apple Pay in these stores”. Contrary to the wider media reporting that these retailers have “partnered with Apple”, it seems that these are the U.S. merchants accepting contactless EMV. In many countries, the list is much longer with no push from Apple and those same merchants will no doubt now be accepting standard contactless EMV cards. In countries such as Canada and Australia, a large percentage of transactions is already contactless. So, it’s great that Apple is supporting contactless EMV, however, this is not an exclusive Apple initiative: it’s an endorsement of existing standards.

What about mobile payments for the remaining majority?

Apple Pay will initially be available for customers of the largest U.S. banks that have the latest iPhone or Apple Watch. But what about those outside the U.S? The good news is that millions of transactions are already happening around the globe without Apple’s intervention, simply by using the contactless EMV standard. This is not restricted to only iPhone since the same functionality can be offered across a broader range of mobile devices, such as those running Android and also Blackberry, which collectively outsell iPhone by more than seven to one according to IDT’s figures for Q2 2014. Additionally, these other operating systems provide a further benefit to issuers by keeping their brand in front of their customers and allowing them to integrate the functionality with their existing mobile banking app.