Apple continues to hit the rumour mill. The latest article on CNET made me comment with the following:
“The question to me is not whether Apple will expand their payments capability, as that seems inevitable, but more the question is whether Apple will dare to step into the open payments ecosystem or stay with their closed Apple only payments capability.
Since I and my company (PayX International) have over 25 years operating in the open payments ecosystem worldwide then I believe I have some ability to offer an opinion that Apple will stay in the closed play for 2 reasons:
1. The open payments ecosystem today is contrived and very complex having been built layer on layer over 30-40 years. If someone could recreate it with today’s technology from scratch then it would be beautifully powerful and simple in comparison. The challenge is that today’s global payments ecosystem actually delivers (albeit very quirky) and there are so many players with assets invested in it that a new ecosystem would cost a fortune for the world to adopt, and no compelling business case for each player to do it, at least right now.
2. Apple has a track record of putting amazing style and sex appeal by polishing something that is quite simply defined & already works. Apple is not known for taking on a complex global challenge (i.e. payments is far from simple today) and solving/recreating a completely new system. Apple would either have to replace much of the entire existing payments infrastructure or it would have to work with the existing open payments ecosystem. Either option is extremely challenging. Replacing/reinventing global would mean literally hundreds of millions of players would have to change, meaning cost and risk even when they decide there is a compelling reason, and Apple would have to drive and manage all the discontent in the change cycle – not what Apple normally goes anywhere near – it likes 99.9% happy customers all the time. The other alternative of working with the existing ecosystem similarly will cause Apple lots of heartache since the existing system has all sorts of complaint mechanisms like chargebacks and fraud which Apple again would be subjected to sorting out for its customers – a lot of hassle and not the Apple way.
Many people who are not in Payments do not see the intricate complexities, and many of the biggest new guys have tried payments without much success. I believe Apple absolutely has a strong desire and position to expand their payments space but I believe for the reasons above that Apple will be constrained to expand only in its closed payments ecosystem. This means there is a massive constraint on the scale and penetration possible – frustrating for many I know.
I would like to be proved wrong :)”