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. 



A swift transition to in-app in Cologne

The kind people at Visa Europe invited me over to give the keynote talk at their Retailer Forum in Cologne. The thrust of my talk was the transition to in-app (and the corresponding shift in retailer strategy “from check out to check in”) and the importance of developing strategies around this transition that exploit the key technologies APIs, apps, tokenisation and all that jazz. I had a great time and enjoyed the event (I learned a lot about payment data analysis from BeyondAnalysis), but I also had an interesting and weirdly self-referential payments experience

I flew into Cologne and found a taxi. Off we went, and before you could say “fourth largest economy in the world” we were at the hotel. I handed over my payment card, and the driver looked at me as if I had just handed him a piece of toast with my face on it. I tried miming tapping the card, then tapping my phone, then just blankly staring at the card. He shook his head: he didn’t take cards. I opened my wallet and showed him that I had no cash. Then I had an idea and went into the hotel and asks the guy at the desk if there was an ATM in the building, or nearby. He shook his head. “Can you give me some cash against my card” I asked him. Another shake of the head. So I went back out to the taxi and gave a shrug. The driver took out a piece of paper and gestured. I handed him the card and he laboriously copied out the card number (which was hard to make out in the semi-darkness) and the expiry date. He seemed happy with this, and I took his gestures to mean that HQ would run it CNP later on.

But then I thought… this is my MasterCard prepaid Euros card. Surely it will be declined if keyed manually? So I wrote my mobile phone number on the back of the piece of paper and then pointed at the hotel indicating that if there was any problem he could find me at the hotel. He never came back.


I used this to story to illustrate a point in my presentation. I said that no-one in developed markets uses cash for taxis anymore because you either pay by card or, as I do most of the time, in-app.When I had finished going on about how certain retailer categories in the German market might skip card acceptance and because of high smartphone penetration move directly to in-app payments, Jens Loos pointed out that normal people in Cologne used MyTaxi already.

MyTaxi Pointer

So when it was time to head on out, I downloaded MyTaxi (which took about eight seconds) and then booked a taxi (which took about another eight seconds) and at the end of the trip I added a tip and put my thumb on TouchID (which took about another eight seconds) and… that was it. As I pointed out the first time I paid in a taxi using a phone, it’s impossible to imagine a better way of doing it. The reason is, of course, that when you sit in the back of a taxi, you have your mobile phone in your hand. Every time. All the time. So it’s the natural way to pay.

(What’s more, when we got to the destination, I got the trip half price as they were having some kind of promotion! Hurrah!)

Summary of my German payments experiences: card terrible, in-app brilliant. Make of this what you will!

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