How Apple is disrupting payments

When you're active in the intersection of order & pay & mobile like us, from time to time you get an inspired client shouting: "wouldn't it be cool that you just have to tap your phone on a device and the payment is confirmed". My typical response - just to get expectation management right from the start - was that such scenarios were absolutely cool... but not really realistic due to the fact that a high number of above average spenders have an iPhone, and that Apple was blocking the usage of NFC for external devices. The usual next unfolding action is the client throwing their hands in the air, wondering why nothing in IT can just be... simple.

For all my clients in despair, Apple is finally coming back from the fortress strategy they were building for the past 4 years (NFC was introduced by Apple on iPhone from version 6 in September 2014). Maybe they start to believe that open ecosystems aren't that bad at all, or maybe they just want to come up with another reason to make you buy the new iPhone Xs, Xs Max or iPhone Xr. Whatever the reason, these iPhones have the capability to understand nearby NFC tags and they can open an app on the mobile phone.

That 'open an app on the mobile phone' can be taken quite literal. Thanks to the update in September, not only can an app be opened on the mobile phone (as already mentioned), but more importantly the iPhone can be in locked status and the app doesn't have to be opened. In terms of convenience we're talking another ballgame here. While NFC was already part of the strategy of Apple, and already accessible for some third-party developers, with the update of iOS in September 2018 quite some new possibilities open up for iPhone holders and developers targeting this ecosystem, especially in the payment space.

These possibilities are quite limitless (think about paying at a gas station or a parking just by tapping your phone), but in this article I rather zoom in on the implications of current middle men in the market. Say you're payment provider that has built a business around renting out/selling expensive POS terminals and handling payment transactions at gas stations. Or parkings. Or retail shops. Or practically any place where POS terminals are, and where businesses need to sign up for an expensive maintenance contract as these terminals have the habit to fall into pieces the moment you effectively start using them.

When both Android and Apple now have support for reading NDEF tags in the background, a lot of payment scenarios become reality without the need of a POS terminal. Think about vending machines. How many vending machines are there in the world? Sounds like a good question for recruiters at Google or Facebook. Anyway, let's say a whole loooot. One of our clients is a well-known vending machine producer, and payments at such vending machine is a real pain - especially when things go wrong. Providing a solution where the payment part could be solved with a simple NFC tag on the machine would come as a big relief.

Some of you may be concerned about security issues - Apple thought about that. Passing by close enough to an NFC tag with NDEF capabilities will make a notification pop up, even when your phone is locked. However, you will still need to confirm manually the payment transaction (note: next to payments, there are other actions possible like Facetime, sending email etc...). So it's definitely not the case that you're opening the box of Pandora.

Will the middle-men in this scenario be disrupted, and are POS terminals a thing of the past? At Infinity Mobile we like to say "the writing is on the wall". POS terminal vendors will not be extinct tomorrow, but the landscape is changing at a high pace, and Value Added Services will increasingly become more important in a connected world where offline and online will merge together. If you're interested to know more what mobile scenario would be possible for your business, feel free to connect with me on Linkedin.
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