NFC isn’t the real reason for Apple Pay

As I am sure many of you will remember, the thing I was most wrong about – ever – on the Tomorrow’s Transactions blog was that I was convinced that Apple would not bother with an NFC interface for the iPhone. Luckily, my blog is not a blockchain, so I could go back and delete this post if I wanted to. But I am gentleman and man of integrity and I cannot do sufficient violence to my conscience to rewrite history in this fundamentally misleading way. Hence my error stands as testimony to my integrity. My reasoning at the time of this broadcast error was that since “app and pay” would eventually come to dominate “tap and pay”, I thought that Apple would focus on the big picture and ignore the age-old card/POS interface. I assumed that they would use Bluetooth, wifi and mobile to link the customer and merchant and eventually dispense with the card in the middle, whether using stripes, chips or NFC. At that time, we had already built an HCE-over-BLE app for a project that we were involved in, so I knew that we could easily obtain better-than-chip-and-PIN security without having to tap anything, and I thought Apple would just ignore it: what did they care, I reasoned, if you can’t use your iPhone to ride the bus* in London?

Well, I was wrong. Apple implemented their own sort-of-NFC (they did not implement the full NFC standard) and they locked down the interface so that third-parties could not gain access. They implemented just enough to get the banks to spend gazillions on the tokenisation infrastructure that was needed to bring that better-than-chip-and-PIN security to online and mobile commerce. Well, it worked. They have created a secure and convenient payment platform. As I wrote before…

Select Apple Pay, thumbprint, done. Why isn’t all in-app purchasing like this. Come to that, why isn’t all purchasing like this. Actually, it soon will be…

From Don’t judge mobile payments by the way they work now | Consult Hyperion

This indeed where Apple is heading, and I’m not the only one who thinks that perhaps people who were focused on the NFC interface at retail POS (and complaining that not enough retailers take it and therefore Apple Pay is a bit of a flop) were missing the bigger picture.

He says Apple Pay is appealing, but he wouldn’t switch banks just to access that one feature. “Not over that. There’s too much work involved just for tap-and-go,”

From Early days, but Apple Pay struggles outside U.S. | Reuters

You can see the point. If you already have a contactless card that works everywhere, it’s not that exciting to be able to tap your phone instead of the card. So people don’t. They already had a perfectly good solution to the card payments problem: a contactless card (or, in my case, a contactless sticker). But the fact that it’s not exciting to tap the phone just does not matter. It’s not the play. There are reasons why I love Apple Pay (especially because I have on more than one occasion forgotten my wallet when going to the office) but when I dropped my iPhone in the toilet and was on an old phone for a couple of days, it didn’t really matter that much because of my contactless Curve card in my back pocket.

The thing is: paying with a plastic credit card isn’t really that difficult. With Apple Pay, the bigger point is that it’s also a way of paying for stuff online.

From Who Cares About the New iPhone Camera? The Real Change Is Apple Pay | WIRED

Brian Rommele, who I always take very seriously about this kind of thing, says that it is already clear that Apple Pay in the browser will be a very big deal indeed. I already find it frustrating when I go to pay in-app and I have to enter a CVV against a card-on-file just as if it were 1996 all over again (I’m talking about you RingGo) instead of just thumbing it so I can see that the in-app and online experience will be transformed.

In my early testing I can confirm that the checkout abandonment rate for websites that use Apple Pay Safari will be reduced significantly.

From The Apple Pay Safari Vs. PayPal Battle For Web Transactions Is An Invalid Argument. — Medium

Who won’t use this? For Apple Pay, Android Pay, Samsung Pay and every other pay, #appandpay is way more important than #tapandpay and way, way more disruptive. Note also that it is a very short step from Apple Pay to Apple ID, where revocable identification tokens are loaded into the tamper-resistant hardware alongside the revocable EMV payment tokens…

* I use my iPhone to ride on London underground, buses and Dockland Light Railway all time. All the time.