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Monthly Archives: October 2014

Are Mobile Payment Processors the Banking Breakthrough of the Future?

In the technology world just about everyone knows that Apple leads the way and other companies soon hop on the trail that this technology giant has forged. It turns out that it isn’t just technology analysts that are staying up-to-date with the latest news from Apple, as financial industry analysts are also paying quite a bit of attention to the company too. This only makes sense, since Apple’s Apple Pay mobile payment technology has been getting a lot of press lately.

Some analysts believe that the technology could play a major role in reshaping the ever-growing mobile payment market in the months and years to come. After all, Apple shattered sales records by moving more than 10 million of its most recent iPhone model, so they know a thing or two about supplying the products and services that people demand these days.

Chris Caso, an analyst from Susquehanna said, “Apple Pay is going to be a hit. The Apple Pay mechanism is much easier than the prior attempt by Google with the Google Wallet.” Caso went on to say that he thinks Apple AAPL, 0.55% has addressed concerns about privacy by implementing a “tokenization” technology to Apple Pay that will prevent peoples’ credit card information from being stored on the systems that merchants use to process online payments.

The use of traditional credit cards has proved to be an obstacle to the mobile payment industry for years now. The process of removing a credit card to swipe at traditional points of service is not hard, so people have not been clamoring to jump on board with digital payment methods.

Caso, however, believes that Apple Pay will have distinct advantages that traditional credit cards cannot provide. The use of Apple Pay, when integrated with mobile apps from vendors, will provide distinct benefits to customers. People will be able to instantly accrue and use rewards points and other incentives that are tied directly into making payment with Apple Pay and merchant applications. In other words, merchants and vendors will continue to offer incentives to entice consumers to pay for goods and services using their smart phones.

Apple is doing all that it can to make sure that the big banks, like Chase, Bank of America and Wells Fargo, along with retailers, like McDonald’s, Whole Foods and Nike are on board to support the transition to more consumers using Apple Pay. The company has even worked out partnership deals with the big credit card companies, like Visa, MasterCard and American Express. These partnership deals allow end users to seamlessly tie their existing credit card accounts with their Apple Pay accounts for a more rewarding mobile pay experience.

The fact that the iPhone offers superior digital fingerprint technology adds another layer to the Apple Pay big picture that will make it easier, and more secure for people to transition from using their traditional wallets and move forward into the financial future by using their mobile devices to make quick payments at retail locations.

Of course, Apple does expect the final result of Apple Pay to be higher profits in the very near future. Revenue gains could reach around $89 million in transaction fees by the end of the next fiscal year. Some analysts believe that as impressive as that figure is, that by the end of 2016 those fees could peak out at over $300 million, as more retailers get on board and begin using Apple Pay. It is high time that mobile payment processing finally came into its own, and Apple Pay may very well be the technology that allows that to happen.