Apple's Surprising Role with Apple Pay: Reseller, not Innovator

I agree with you as I'd highlighted in my blog post Apple Puts Banks Squarely At The Center Of Mobile Payments. Loyalty, targeted offers, lower fees - I guess they're the way to go for Apple Pay. 

Bit confused here... Apple's always been a reseller and rarely an innovator (in the sense of an inventor of something authentically new).  They didn't create the mouse, GUIs, the laptop, MP3 players or phones with touchscreens.  The original iPhone was completely made with off-the-shelf components.  What they do, better than anyone, is focus on the customer experience to remove the extraneous and make that experience as intuitive and delightful as possible. 

It's worth watching this video about their design ethos, A Thousand No's, (https://www.youtube.com/watch?v=kyQfye4vAQ8) if you haven't yet.  They start with what they want customers "to feel."  That's how they "think different" than everyone else and make such a splash in areas that are normally quite boring.

As for Apple Pay, let me just say that Apple doesn't care about payments at all.  Try using the words "basis points" in Cupertino and enjoy the bewildered faces.  Apple's trying to solve one problem that we all share: in the morning, we all pick up 3 things before leaving the house - keys, wallet and phone.  Apple wants that to be one thing, that's it.  As, once that's the case, you will certainly upgrade to their next insanely profitable device which has given then a war chest of over $194B in cash and made them the world's most valuable company.

They have no need to challenge the status quo in banking and payments nor to care about what merchants think.  If the customer (that is, the top 15-20% of the handset market) remains happy and upgrades, job done, IMHO.

The fact that Apple has managed to un-clog NFC payments is a feat in itself. Point to note is that services do not remain static - expect Apple Pay to morph. Considering how many fledgling services have had to exit by failing to gain traction, it seems bringing incumbents on board is a major achievement.

Hi Roy,

I agree with the essence of your post, however, I would argue that Apple has been a great innovator--not inventor--over the years.  Wikipedia describes this difference as:  "Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to creation of the idea of method itself."

Yes, most at Apple don't know/care about "basis points;" they are trying to build insanely great products.  And the fact IMHO that Apple has been a master innovator makes their current reseller role with Apple Pay all that more disappointing.

Hi Charmaine,

Yes--being the most valuable company in the world and, more importantly, a brand that almost any company would like to be associated with... has helped Apple "bring incumbents onboard."  Agree, Apple Pay will morph/improve.

Not sure whether Apple makes insanely great products or only the insane find Apple products great:) On a more serious note, Apple was already at the top of the cash hoard and market cap charts even before launching iPhone6, let alone Apple Pay. If it still chose to launch Apple Pay, that signals an intent - at least on the part of Apple’s C-Suite if not the average man in the streets of Cupertino - to care about basis points, security, convenience and other elements of payments. Given that Apple Pay is easily the most frictionless mobile payment method around, I tend to believe that Apple does care about payments. Apple Pay may not have disrupted the 3-legged card payments ecosystem but it has definitely disrupted mobile payments methods. Even assuming that Apple’s interest in Apple Pay is soley to push more iPhone6 handsets, it still has to get the basic elements of mobile payments right: Without that, consumer adoption of Apple Pay will be muted; merchants won’t find any business case in upgrading their terminals to support Apple Pay; if consumers don’t find ubiquitous acceptance of Apple Pay, they won’t buy / upgrade iPhone6 with Apple Pay in mind.

Ketharaman--well stated.  I think that when you are as large as Apple, there are only a few market spaces the company could move into in order to generate significant future revenues... and payments is one of them.

Finally, based on latest research re: how many iPhone 6 customers are using Apple Pay (only 6%), it may not be until the iPhone 10 before consumers actually want to purchase the new phone due to Apple Pay functionality...