iWallet will be underpinned by the Banks
It is very predictable that Apple will launch the ‘iWallet’ this week and in doing so introduce a whole new buying experience for consumers. The news is everywhere that Apple have been able to negotiate lower credit card transaction fees for mobile payments across 4 of the major banks in the US. So why did they not cut banks completely out of the loop?
If Apple introduce a closed-loop payment system they have the opportunity to cut banks completely out of the transaction. In this case customers would preload their ‘iWallet’ and the payment goes from Apple to the merchant eliminating banks from the process.
According to Bank Innovation Apple was adamant about getting the card-present rates for transactions made through iWallet. As it is the credit card issuers that negotiate the rates with the payment processors they have been able to negotiate this outcome with the credit card issuers only because they have accepted some of the fraud risks.
So Banks remain in the picture but are very much the infrastructure that sits behind the iWallet but a president has been set and may force other major merchants to start looking for similar ways to negotiate lower transaction fees. So the iWallet may not only introduce a new experience for customers but could force the credit card companies to take another look at how they charge.