The Inevitable ApplePay Blog

So, the payments unicorn has finally made its way out into the world, with more conjecture and hyperbole than, well, the last time Apple did something. Much has been written thus far about ApplePay and it’s going to be hard to write anything truly fresh at this point, but I will try.

While the mainstream media was ooing and aaahing over Apple’s innovative new product, us fintech geeks were generally a little underwhelmed by certain aspects. In truth, I was very impressed by the integration of biometrics and tokenization – absolutely leading edge in terms of where security should be (is a fingerprint a PIN, Mr. Durbin?), but the rest of the ApplePay news was a bit flabby and old. NFC? That’s been rattling around since 2003. Building a merchant ecosystem? Not really – just piggybacking on Google Wallet, Softcard and those nasty looking old terminals at McDonalds that have been gathering McGrime since 2006.

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Apple Pay Starts Today October 20, 2014 –So Why Should You Care?

 Why should you care about the Apple Pay launch?

Consumer Confidence in Mobile Purchasing is Growing

Apple iOS users are young: 60% are under age 45

Apple iOS users are wealthy: 7% have investable assets over $1 million

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Fraudsters Take Advantage as Mobile Convenience Outweighs Security for SMBs

The allure of both smartphones and tablets stems from convenience, pure and simple.  For SMBs, that convenience translates into greater productivity when using mobile devices to manage their business and their finances.  The situation is complicated by the effect that convenience has on the security posture of employees, especially those who are using their personal devices for business purposes (i.e., bring-your-own-device, or BYOD).  When convenience outweighs security, the scales tip to the detriment of SMBs.

What Javelin found in our most recent report is that when you combine mobile-accommodating businesses (who are chasing every productivity edge they can muster) with the intent of fraudsters (who take advantage of every security weakness they can find) that things become unpleasant in a hurry.  Besides having to manage the challenges of company-issued devices, there is also the evolving BYOD movement to contend with.  Without clear guidance on their roles and responsibilities around BYOD and confronted with mobile-specific threats that are overwhelming the security habits of their employees, mobile-accommodating SMBs experience significantly higher rates of payments fraud than average.  And size does not necessarily translate into mobile-security savvy, as middle-market businesses ($10M to $500M in revenue) are no better off than micro businesses ($100K to under $1M in revenue) and small businesses ($1M to under $10M in revenue).

This is where an SMB’s financial service provider comes in.  The mobile security posture of SMBs directly relates to the integrity of their accounts; educating these clients should be a priority because as the use of mobile grows, so does the risk of fraud.  In the SMB Payments Fraud Report, we discuss how to empower SMBs in the fight against fraud – providing them with an opportunity to protect their revenue, which in turn can bolster the relationship with their financial service provider.  We need to restore the balance between convenience and security, but we won’t succeed if we are blind as to how the scales are tipping and why.

10 Keys to Apple Pay: The Quick and Dirty Analysis

Apple Pay 2

Overall Analysis: Apple Pay is the most important mobile payment system to be released to date.

1)      Customers of Apple iOS are the most likely to buy with their phones (67% purchase using their phones), they spend 2X as often as a typical smartphone owner and they purchase higher dollar amounts with their phones ($25 vs. $20 median purchase). Apple iOS control almost half the existing consumer smartphone market (45% vs. 47% for Android) in the U.S. This bodes well for Apple Pay and provides an incentive for merchants to adopt Apple Pay. Read the rest of this entry »

Yes, I really did just accept an a position on the Consumer Advisory Board of the CFPB! (Consumer Financial Protection Bureau)

I just accepted a position on the Consumer Advisory Board of the CFPB. This will require several trips a year to Washington, DC along with several touch-points, and I’m looking forward to getting acquainted with the CFPB’s staff and other 24 Consumer Advisory Board (CAB) members. I have a lot to learn!

I can’t get enough of innovation and digital strategy. My 30 year career started in merchant e-commerce technology, with numerous product management/leadership/launch roles before moving over to product-innovation research some fifteen years ago. The CFPB was formed after the global financial services meltdown  Read the rest of this entry »

Square Peg, Square Hole

It was inevitable really that @Square would have come out with an EMV capable card reader sooner or later. Turns out it was sooner. Yesterday in fact. And in doing so, they answered a lot of lingering questions I had. Notably, how do you move from a business model built around distributing m-POS readers for free to one where the end user would have to pay for the device? My expectation was that the US would follow Europe with PIN pad readers that tether to mobile devices via Bluetooth. This would be quite a shock to the business model since these EU readers retail at around $99 per device. For the US small business that has grown accustomed to free(ish) card readers, this might well push them away from card transactions altogether.

Instead, Square has opted for a halfway house – an EMV reader that is not using PIN.  I asked Square via Twitter if the  reader was PIN capable and they replied…

@nickster2407 Hello, Nick. Right now we’re focused on the US which is a chip-and-signature market.

Actually, it’s not. Not yet anyway.

This decision to avoid PIN obviously keeps the bill of materials down and although we anticipate that Square can’t give these devices away, that the sticker shock for merchants will not be a deal breaker like a comparable PIN pad model. However, it also takes a lead in tipping the US to Chip and Signature (as preferred by Visa) rather than Chip and PIN (as preferred by retailers and the NRF). Just a reminder… Visa was part of the Series B investment of Square in 2011 to the tune of US$27.5 million.

While I think the decision for a Chip and Signature approach is more to do with maintaining the existing business model, it’s not difficult to connect the dots in terms of Visa’s chosen path for EMV and the devices that seed the market. EMV PIN isn’t dead, but this may precipitate a different course for US payment card security, further prolonging the bifurcation of the US vs. Rest Of The World.