"Will Apple Pay Bring Banks And Merchants Together?"

The simple answer is, no!

Apple Pay does nothing to reduce the level of discount fee that the merchants of the MCX consortium are complaining of. Given that the fee that these very large merchants are likely paying will be less than 0.5%, and Apple is taking 0.15% of that, there is little likelihood of the banks any time soon reducing their fees. And the MCS consortium thinks that they can develop their own in-house system via ACH and do it for less? Good luck with that! Tell me again, what was it that killed off all the large merchants’ in-house credit operations in the 1970s (?).

Regardless, the launch of Apple Pay has been the greatest media/marketing beat up yet of the 21st century! But, all that hot air will soon enough cool and Apple Pay will ultimately succeed to the degree that the limited number of Apple’s latest-model iPhone users choose to use it for payments—no more no less …

“In those days, and when cards were new …”—Merchants were never “happy for a new way to be paid”—I am old enough to remember very great resistance to their use. Cash was king. The German retailer Aldi still won’t accept payments via credit card unless they have the statutory right to surcharge its cost—and that has not stopped Aldi from being very successful …

I think the chances of the banks getting into bed with some low-fee “CurrentC’, if it ever sees the light of day, are zero—unless the merchants are prepared to assume the whole risk of fraud—of whatever kind; frankly, “CurrentC” is dead in the womb …

“Banks may be investing in real-time ACH capabilities …”—Why on earth would the banks want do that? The higher credit card fee (of which the banks get the lion’s share and the issuing bank the greater share of that) is due to the inherent risk involved in the “interactive” nature of the credit card system; if ACH was made interactive then the same risks for the banks would arise, and the fee would rise …

The fact is, “payments” are a banking activity, not a merchant activity; the banks have recently made available new, secure, online/mobile digital wallets: “MasterPass” and “Visa Checkout”—perfectly logical extensions of the credit card system. If the banks spent as much time promoting their new digital wallets to their merchants and card-carrying customers as they have done fawning over Apple Pay, they would not need Apple Pay, and they could maybe pass on at least that 0.15% to Mr Walton and his friends.

Regardless, the problem for merchants is that neither Apple Pay nor the banks’ new digital wallets yet offer merchants a reduction in their discount fee. Maybe, when the greater security of these new services have shown a substantial and ongoing reduction in payments fraud, the banks will offer merchants lower discount rates; who knows, I just wouldn’t hold my breath while I waited—no more than I would do so, waiting for Wallmart et al to pass on to consumers any savings from “CurrentC’, if it ever sees the light of day …

My predictions: CurrrentC will be still born or will die soon thereafter; all the Apple Pay headlines finally fade away; eBay’s clunky “PreyPal” slowly fades away; all the other intermediaries, new and old and riding on the back of the banks’ existing systems, continue hanging on by their teeth; Bitcoin remains an idea that retail payers simply aren’t interested in; and, finally, “MasterPass” and “Visa Checkout” online/mobile digital wallets become as ubiquitous as are now their plastic cards …