Dan Frommer makes the case that the existing US mobile payment ecosystem is not easy to tame.
Why? The system is still a mess. In the US, for example, no in-store mobile-payments system has reached critical mass—thanks to a complicated set of relationships between merchants, card companies, payment processors, mobile operators, handset makers, and mobile-wallet providers. Companies are so focused on claiming their share of the “value chain” that they’ve lost sight of the needs of the people who are actually supposed to be using these services. Payment providers have done such a lousy job with their early mobile products that Starbucks has emerged as a leader by simply doing its own thing.
If, as rumored, Apple does roll out their own mobile payment system, what’s their edge?
Apple, unlike Google, has absolute control over what goes into its phones, so it can ensure that all new iPhones—and other devices, such as its reportedly forthcoming wearable gadget—support its payment system. With more than 40% of the US smartphone market, Apple can get this service into millions of pockets faster than any other company. And because Apple insists on having the upper hand in its relationships with mobile operators, it shouldn’t have any embarrassing situations like Google had with Verizon Wireless, which effectively blocked Google Wallet in 2011.
The Google Wallet story is a perfect example of the difference between Google/Android and Apple’s position here. Unlike Google, Apple controls their ecosystem, makes their own hardware and, most importantly, has a big head start on account holder signup.
Some 800 million people—iTunes account holders—already trust Apple with their payment information. In an era where retailers’ databases seem to be compromised every week, with the right security features—such as potentially requiring a fingerprint scan to pay—Apple could foster the sense that its payment system is safer than swiping plastic. And also that it’s more private than a similar wallet run by Google, which is known to feast on all available data.