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Any large bank comprises of different businesses with different drivers and regulatory frameworks. Silos are a fact of life in the banking industry and, unlike any other industry, many silos in banking - e.g. investment banking and proprietary trading - are imposed by regulation. Banks have been happily running in this manner for ages. Many IT programs - especially the ones in DW - simply don't get this. If they stopped trying to harmonize what're intrinsically different businesses that cannot and should not be harmonized, many of these problems will vanish by themselves.

@JamesP: Good catch! However, old adages like "change is the only constant" are very useful to explain away such "minor anamolies":)

@AlexP: Agreed in terms of market cap but not necessarily in terms of profitability: Financial services was the most profitable industry in the last FORTUNE 500, ahead of tech. 

@AlexP: Fees and / or interest charges for LOC.

@ChrisY: You're absolutely right.

To me, the key to this whole thing lies in the statement "Apple hopes that working with Visa will also help it bypass the payment processing chain, helping it to lower costs for merchants and customers,...".

By issuing a mobile-only Line of Credit for all cards on file in iTunes, Apple can get 700M customers overnight and bypass the issuer bank in the process. Many retailers have already announced plans for iBeacons. Ensuring that they support instore payments frictionlessly could result in the acquirer bank getting disintermediated. A tieup with Visa will ensure open loop payments. By cutting out the issuer and acquirer, Apple could in a position to offer lower MSC / MDF to merchants, which will give merchants the compelling reason to step up their investment in new infrastructure. Maybe this would require Apple to get a lending / banking license.

If all this happened, mobile payments would be one more industry that Apple would succeed in where others before it have failed.

Even if Amazon's decision to stick to loyalty / gift cards has nothing to do with what I said, I'm still happy! 

Mobile Wallets: Fix What's Broken - And It Ain't Payments

@AlexanderP:

Apart from inertia, there are many other reasons why online merchants decline PayPal. As I’ve highlighted in Cash in Hand Is Worth More Than Card In Bush, PayPal shares the blame for some of them. 

It's in the DNA of the VC industry to fund many copycats in the same industry. Unlike other VC-funded industries where one "winner takes all", the alternative payments industry hasn't produced any clear winner.

Choosing from a range of undifferentiated competitors is an old problem that can be solved as long as all players provide some "compelling reason to buy". Maybe few payment startups do that, which explains the status quo.

@BrianW: You're absolutely right but the notion of working with "legacy systems controlled by banks" would invoke a response of "aaaaarghhhhh" from an archetype startup! After all, that's exactly who they set out to disintermediate :)

Sorry but there's a fundamental misunderstanding here: My post mentions where I paid but doesn't say anything about receipts for this specific cab journey. The ways things happened, I paid by card at the petrol station but I got the taxi receipt from the cab driver. I submitted the taxi receipt as part of my tax return. Per records available with me and submitted to the tax department, the cabbie / cab company are on the hook for the income and couldn't have evaded tax in this specific case, with due respect to what happened in Israel, Maine or elsewhere.

While tax evasion might be a huge problem, cash can't be singled out for perpetrating it. And, as I mentioned above, the big ticket variety of it certainly happens via cashless modes of payments. 

Do we need government intervention to break up banks when the likes of Apple, Facebook, Google, Prosper and other neobanks are supposedly going to decimate them shortly and turn them into dinosaurs before you could say B-A-N-K?