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Global Wrap: In Australia, MC Exec Lashes Out At Apple/Amex Deal

This week’s global payments report has investments from Mexico, India and the U.K., an Australian cyber currency IPO delayed for the fifth time, a Canadian Amex small merchant initiative and a MasterCard exec lashing out at the Apple/Amex deal in Australia.

There’s more fallout from Apple’s decision to launch in Australia (and Canada, for that matter) only with American Express cards. This time, it’s from a MasterCard exec crying foul, arguing that regulators take a more lax regulatory position with Amex than with other card brands.
Eddie Grobler, division president of MasterCard Australasia, said “Apple Pay launching in Australia with Amex proprietary cards was a symptom of its ability to charge merchants much higher fees than Visa or MasterCard and therefore having much fatter margins to share with Apple, which has been demanding a cut of the fees paid to banks before allowing them onto Apple Pay.”

Use Apple Pay, Get Free Rides On The London Underground

The only viable long-term way to get shoppers to change their preferred payments method is to give them a reason to do so. Whether that’s a discount for using NFC rather than plastic or greenbacks, coupons/discounts that are only available using a specific payment method or some other perk, consumers need to get something concrete. This is the bulk of the message that MCX is screaming. Someone at Apple is paying attention.

With its U.K. rollout, MasterCard announced free Apple Pay travel days until the end of the year, but only on Mondays. Technically, the fares aren’t free but riders will have those fares reimbursed. “Customers can travel on Tube, buses, tram, DLR, London Overground and most National Rail services in London,” said a MasterCard statement. “From a standing start to today, over 220 million journeys have been made using contactless bank cards and devices with over one million contactless journeys made every day. Currently, contactless journeys made across all modes make up nearly 25 percent of pay as you go journeys.” More to the point, though, those contactless payments have generated non-travel contactless payments.

MasterCard Thinks It Can Standardize Mobile Loyalty. And It Might Be Right

For mobile payments to move into the massive adoption phase, some version of loyalty/couponing will be essential. Otherwise, once the novelty wears off, there are simply no sustainable reasons for shoppers to stick with mobile. But with every mobile player preparing to somehow push loyalty, the chance of having conflicting incompatible technology is all-but-certain. Can MasterCard change that?

On Tuesday (Nov. 17), the number two card brand introduced a loyalty middleware specification that it hopes will be adopted widely enough to give mobile loyalty a chance to grow seamlessly. Given that few if any mobile payment schemes will be offered without support for at least one issuer’s MasterCard, the card brand seems a sufficiently politically neutral player to sidestep the usual vendor resistance. In MasterCard’s statement, the brand said it’s proposed specification “enables mobile applications to offer a seamless connection between payment, promotions and loyalty redemption. It enables consumers to select their loyalty card, the coupons/promotions they want to redeem, and make a payment in a single or double tap at a contactless terminal.”

Samsung Pay’s Encryption Perception Problem

It seems a funny thing has happened on the way to using Samsung Pay for some users, as the emerging mobile payments platform isn’t compatible with a phone’s encryption protocol. Simply stated: if the phone is switched into encrypted mode (as many who use their phones for work are required to do), users can’t add cards to their Samsung Pay wallet.

This isn’t going over well. Although it’s not yet clear if this encryption conniption is a glitch or intentional, either way it is sending a positively terrible message to users about Samsung Pay and security. Not requiring a user to activate phone encryption is one thing, but refusing new payment credentials if it’s already been activated is very different.

Apple Wants Into P2P Payments, Talking With Chase, CapOne, Wells Fargo, U.S. Bancorp

In an attempt to control as much consumer payments as possible, Apple is in negotiations with J.P. Morgan Chase, Capital One, Wells Fargo and U.S. Bancorp to launch a bank-account-based P2P payments service, according to a Wednesday report in The Wall Street Journal. If successful, it’s value would be huge to Apple, but not on a per-transaction fee basis. The goldmine would be the data, the equivalent of knowing every check, money transfer and payment card transaction made by millions of its customers.

Beyond the privacy implications of a consumer goods company having so much consumer personal data—on top of whatever health data is being gathered through Apple’s Health app—there are also security concerns. The more avenues of access that exist into a bank account, the more chances there are for a glitch to withdraw more than expected or for the ultra-sensitive bank account routing numbers to leak where a cyberthief could see it.

Apple Pay Penetration Stats: The Less We Know, The Better It Is

Although there is no question today that mobile payments are increasing, to what degree is challenging. This confusion was magnified this month when Bloomberg quoted the Aite Group as saying that ApplePay accounts for one percent of all U.S. retail transactions.

Aite denies ever having said that—the analyst said that he said that it was much lower than one percent—and indeed Aite says that Apple Pay represents a tiny fraction of one percent of current U.S. retail sales. IDC estimates that Apple Pay today accounts for about one-tenth of one percent of all retail in-store transactions in the U.S., while Javelin puts that figure at about half—roughly one-twentieth of one percent. When moving from Apple Pay to Google Pay, the estimated slices get even thinner. Crone Consulting president Richard Crone sees Google Pay representing about one-third of Apple Pay transactions. IDC analyst James Wester put Google Pay’s figures in an even more vague area: “Google Pay is so small to be incalculable. I can’t even estimate what it is because it is so small,” he said.