Apple killed the mobile wallet? No, not in the least
Rick Oglesby, senior analyst at Double Diamond Payments Research, says Apple has killed the mobile wallet. No offense to Mr. Oglesby, but I think just the opposite is true. In fact, I believe Apple has done itself and its customers a gross injustice by walling off access to its wallet contents, which currently include payment data as tokens.
Apple is the only company that owns and controls the hardware, firmware and operating system of the device used. And it has big enough political chops to push the product through traditional channels, all while signaling the death knell for the mobile wallet supported by the same channel that couldn't say "no" to Apple the way they did to Google.
But instead of using its influence for the greater good, Apple has shut out outside developers and in the process, has stunted innovation. Granted, we are only looking at Apple Pay 1.0, and Apple decision-makers could change their minds once they've figured out their payments revenue model. However, it's a worrying start.
While I was with mPOS pioneer ROAM Data, we were always concerned that Apple was going to eliminate the traditional audio headphone jack since they didn't/don't monetize that hardware element. It seems Apple learned its lesson when it launched the NFC transmitter and the secure memory chip for payments. Apple has force-fed retailers and banks a solution that isn’t suited for the entire ecosystem, and that doesn’t make long-term sense.
I agree with Mr. Ogelsby when he says that the Apple solution, the one that ties the tokenized wallet contents to it own proprietary secure memory chip and NFC controller, has given Apple a "massive advantage" in creating a great customer experience. However, I don't necessarily agree that other companies can't match that same experience on a more open OS and with a software-only solution.
There can and will be many viable, secure and exciting wallets on operating systems and hardware stacks that remain open, like Android, as long as the card networks realize and value the additional security and authentication factors that can be put into place with these software-only solutions to enable merchants to use them without penalty (CNP vs. CP rates) and without degrading the customer experience. It won't happen tomorrow. But I believe, that over time, it will be proven that data that can be gathered via mobile to authenticate a user will reduce the need for Apple hardware dependency and potentially open up non-NFC contactless transmission methods for card present, or similar rates, for merchants (which will help drive adoption).
There are host tokenization solutions available today that do not require a cloud connection, so latency will not deter from the customer experience and the integrity of the token is not compromised.
Apple killed the mobile wallet? No, not in the least. Has it influenced the way competitive wallets grow? Absolutely. But I wouldn't run out to buy shares in chip manufacturers because of it. Software-only solutions that use proven token generation, storage and transmission methods are not dead. They will just take a new route to fruitition.
Rob Stringer is the vice president of marketing and marketing development for Cortex MCP. Prior to Cortex, Rob headed up Marketing, Product, and Client Services for ROAM Data. He was responsible for all product roadmaps, marketing initiatives and client engagements for ROAM, helping them secure their series A and B rounds of funding.
Photo courtesy ofKārlis Dambrāns.