How Apple Pay reveals Apple’s modus operandi

“The introduction of the Apple Pay service gives a real insight into Apple’s method of operation,” J. M. Manness writes for Seeking Alpha. “We cannot enter Apple’s boardroom, nor sit in on development sessions, nor ask the leaders, but this product can let us see a lot about its M.O.”

“To outsiders, it appears as if Apple Pay is arriving during a perfect storm – but a positive storm that gives it the wind at its back. A whole set of enabling factors have coincidentally occurred to favor the adoption of Apple Pay – things such as the setting of the EMV tokenization standards, and the availability of processor designs with Apple’s Secure Enclave technology (see: semi-monopoly),” Manness writes. “While some portion of this may be chance (the recent hacks into Target, Home Depot, etc. which puts security in the spotlight), others are Apple’s own doing – a combination of riding a technological wave, and directing that wave itself.”

“Apple tries to learn from its earlier mistakes. One of its largest product mistakes was the Apple Newton,” Manness writes. “I believe a profound lesson was learned, and this rule is strongly evidenced in the Apple Pay system and previous systems as well. You must wait until the concept, the software and the hardware capabilities are all available before you introduce a product… I’m not sure when Apple began working on the Apple Pay project. Undoubtedly it has been floating around for years. Two key patent applications occurred in mid-2012, so clearly Apple was thinking very seriously on this since at least a year earlier, which is about the time that Google Wallet was coming out. But rather than rush off to be the first with an NFC payments solution, Apple chose to wait for all the pieces to come into alignment before proceeding.

Much more in the full article – recommended – here.

16 Comments

    1. I know right? It’s like the world is slowly waking up to insights Apple has shown for decades. Omg, Apple products are better than the sum of their parts! Omg, Apple thinks about the consumer first! Omg, Apple takes their time and thinks things through to the best of their ability before they release them (some exceptions to that one!). Omg, Apple doesn’t sell your info like they are your pimp! What a crazy business model!!! I can’t believe it’s succeeding!!

  1. One of its largest product mistakes was the Apple Newton…

    No. The innovative Newton triggered off the entire PDA (personal digital device) revolution that lead directly to the SmartPhone revolution, which Apple owns. It pays to think a little deeper than 1 dimension. It pays to think ahead…

    1. I think you miss the point of the article. They learned from Newton that even if you have good tech – wait until you have leverage in the vertical or a unique “angle” that gives you a competitive edge. The Newton was AMAZING tech but it lacked the angle. it was like an iPod without iTunes. Modern Apple would not release a “Newton” without an “eco system”.

      1. Yes that is the point, no matter how ahead you are, how compelling the technology (though Newton was ahead of the tech capabilities at the time really) without the supporting infrastructure and strong focus on its usage benefits.

      2. “Modern Apple would not release a “Newton” without an “eco system””

        Really? Didn’t the original iPhone release without 3rd party Apps? The only thing it linked to was iTunes with a sync cable. Not much of an ecosystem.

    1. Apple called “Secure Enclave” when they introduced the 5S last year. Not it has a new name. And since Apple’s processors are the only ones with it, can’t we say it’s Apple’s technology?

      1. Google Wallet uses Secure Element (and I believe it’s part of the NFC standard).

        Perhaps I’m wrong and Apple has a similarly named but different technology, but I doubt that, due to trademarks and such.

      2. The Secure Enclave is the section with the A7 and A8 SOC where the iTouch fingerprint data is stored. The Secure Element is not part of the SOC (I believe), and is the common NFC term for where user credit card data is stored on the device.

  2. My letter (email) to the Department of Justice Anti-Trust Division regarding the CurrentC Cartel Blocking Apple Pay:

    Recently Apple has introduced a new secure payment system based in part upon existing NFC technology that works with the newest Apple iPhones. It is agnostic as regards payment and is supported my Visa, Master Card and American Express. The list of banking and financial institutions that honor and support or plan to support is growing and long. This is an option that many consumers and merchants have been looking for.

    The list of merchants that have joined what looks like a cartel to support a rival system have actively turned off access to Apple Pay customers on existing payment systems in some of their stores (CVS and Rite-Aid have been reported widely in the media) as well as Google’s NFC based secure payment system. Wal-Mart has also announced that it will not support the system despite having the technical ability to do so. This is concerning for consumers who wish to have a choice of secured payment systems.

    Looking at the list of member/partner retailers shows almost every large chain retailer including Target, Sears/K-Mart, Wal-Mart, Best Buy, Kohl’s, Lowe’s, Publix and almost every large chain operator of fuel stations in the United States. I am no lawyer, but this looks like a cartel and the blocking of previous support for NFC systems from Apple and Google looks like a co-ordinated effort to kill off rival payment systems, denying consumers a choice. The fact that the Apple system is not data mined and the CurrentC system is, makes the option to use Apple Pay for those concerned with privacy even more important.

    I am formally requesting that the Anti-trust division of the Justice Department investigate this matter to see if anti-trust laws have been violated in any way. I am also formally asking that the results of the inquiry be made public at the soonest possible date. This matter not only involves free markets, consumer choice and open markets- it also involves denial of consumer choice for a payment system that is designed to protect the privacy rights of consumers from data mining.

    Thank You

    Send yours to:

    antitrust.atr@usdoj.gov

  3. All of the technical information will not matter to an ordinary person. What WILL matter is the fact that the retailer will NEVER get any information about that consumer except what they bought on that day. They may store the transaction information in their database, but they won’t be able to match it with any previous ApplePay transactions from the same consumer, since the token numbers will be different and random every time, so no purchasing history will be collected.

    I just read elsewhere that this purchasing history and other related consumer information is worth some $300 per year per active wallet. Think about it: if you buy stuff every three days at the same place (such as CVS or RiteAid), that means that each of those transactions (whether it is for a pack of gum, or toilet paper) is worth $1 to them. That is significantly more than what they may save in fraudulent transactions caused by credit card fraud (which ApplePay would eliminate), and more than those merchant fees.

    There is a logical reason why merchants don’t want ApplePay and want their own system where they can mine customer data: such system brings in $300 per year per customer. That is a massive monetary incentive.

    1. I’ve been wondering how long it would be before some of these stores start noticing customer data has disappeared because of Pay? I do a majority of my shopping every week at Meijer here in SE Michigan – I probably stop there on average 5 – 7 times per week. I have traditionally always used my PNC Debit card when I do shop there. As of last Monday, I have only used Pay when I have shopped at Meijer. I know I’m just one data point, but how many data points need to disappear before they take notice?

      Coincidentally, because I have always used my PNC Debit card when shopping at Meijer, when I check out there are usually 5 or 6 of those printed out coupons. They have a long history of my Debit card number’s purchases, and they tailor those printed out coupons based on that history. I have noticed during this last week of using Pay there, that at most I get 1 printed coupon, usually a competitive coupon to something I just bought. A couple of times, it did not print any coupons this week – that is a rarity in my experience there over the past 6 years. Their system doesn’t know it’s me any longer … just the way I like it!

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