Is it time to cut bait on banks excluded from Apple Pay?

“The brutal fact is that Apple (AAPL) enrolled 15 goliath financial institutions in Apple Pay — and now Apple may have little incentive to add many more institutions to the mobile payments system,” Robert McGarvey writes for TheStreet. “That has experts wondering about the possible impact on the excluded banks.”

“When Apple Pay launched on Oct. 20, it had just six credit card issuers signed up. With that count, the company claimed it opened access to a possible 83% of credit card transactions. There is no official count with a new institutions added in but, sources said, the figure is approaching 90%,” McGarvey writes. “Current Apple Pay entities are American Express (AXP) , Bank of America (BAC) , Barclaycard (BCS) , Capital One (COF) , J.P. Morgan and Chase (JPM) , Citi (C) , M&T Bank (MTB) , BofA’s Merrill Lynch, Navy Federal Credit Union, PNC (PNC) , Regions Bank (RF) , US Bank (USB) , BofA’s US Trust, USAA and Wells Fargo (WFC) .”

“Chris Stulpin, a senior vice president at Pennsylvania-based Capital Markets Group, wrote in a recent research report, ‘Apple Inc. has potentially handed a major competitive advantage to the largest U.S. banks at the expense of their smaller counterparts,'” McGarvey writes. “Others are more guarded. Tommy Marshall, a partner in the banking group at consulting company Capco, said, ‘Being presently left out of Apple Pay is not devastating to financial institutions. It will be a novelty for the next year or two. Most consumers carry multiple payment instruments. I don’t see this hitting community bank payment volume.'”

Read more in the full article here.

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  1. “Being presently left out of Apple Pay is not devastating to financial institutions. It will be a novelty for the next year or two. Most consumers carry multiple payment instruments. I don’t see this hitting community bank payment volume.’” Gee, don’t these CEO’s ever learn??

    1. If he means being excluded won’t be immediately devastating to smaller banks, I agree. If he means it won’t be devastating ever, he’s a fool.

      This is the way payments are going in the future. Apple Pay will continue to grow. Competitor payment systems like Google Wallet will restyle themselves as Apple Pay clones. (Since Apple Pay uses industry standards, this shouldn’t be too hard.) Eventually, using your phone will be the single most common way to pay. If banks can’t get their credit cards on board, those banks will lose customers rapidly.


  2. Somehow I think they have this backwards. Apple is not excluding anyone. All the remaining institutions have to do as apply to Apple to be included. I expect that any financial institution would be welcomed by Apple . Surely Apple would like to brag that every bank in the country is on Apple Pay.

  3. None of these banks are being “excluded,” they have simply (and stupidly) chosen not to participate. When they see how it affects their bottom line, especially after the holiday shopping season, they’ll be putting in applications left and right.

  4. Exactly. The point of the article is that Apple no longer needs to actively seek out banks to sign onto Apple Pay. They are done with their strategic campaigning with financial institutions. They can now all return to Cupertino and simply wait for the rest to come to them.

    1. I don’t think “novelty” is even what the guy meant. “It will be a novelty for the next year or two”? That’s a contradiction. Something two years old by definition can’t be a “novelty”.

      I think he meant that usage won’t be widespread for the next couple of years. Which is true, but only because it will take 2-3 years for Apple Pay-capable iPhones to become the majority of all iPhones in the US. After that, Katie bar the door.


      1. I think even using the word “novelty” cheapens Apple’s service disingenuously There’s nothing remotely novel about it so much as it’s a great advancement. It’s already becoming second nature to many. I think as fast as this is available everywhere it will be taken for granted.

  5. If nobody is being excluded, isn’t it a little odd if the only 15 banks that have announced participation are all giant institutions, with none of the community banks, which are far more numerous? There must be some hurdle to participation, beyond just signing up.

    1. I don’t think that’s odd at all – it seems like a great business decision to me.

      Why would you pursue Small Town Middle America Credit Union, with potentially 2 Apple Pay users, when you can pursue Chase and get hundreds of thousands of Apple Pay users with the same amount of effort? You always try to land the whales, then let the smaller fish come to you.

      1. My point was that it seems really odd that not one of the thousands of community banks and saving institutions in America seems to have signed up. They’re not ALL run by idiots, so there must be significant upfront costs or other barriers that only the big guys have been able to handle.

        1. I suspect there are costs involved, costs that are fairly insignificant for large institutions but would be far more do for smaller banks who in turn will make less from the process having fewer users. Most would sensibly wait see if Apple Pay takes off before making that commitment. As it does they will begin to join I suspect seeing the cost benefits of supporting it.

      2. I do not know about pursuing small outfits but my credit union, TechCU is on board already. I expect most other California CUs will also. In time the outfits in heehaw areas will get on board. There are not a huge number of iPhone 6’s in rural areas yet. Apple has time on its side.

    2. Apple went for the big banks to get the most bang for their effort. I seriously doubt there’s any impediment other than getting their servers ready to accept the Apple Pay account tokens and create the internal links to the actual accounts for real-time billing. Oh, and setting up the $0.0015 (I believe) transaction fee payment back to Apple.

      1. They actually get 0.15 PERCENT of every transaction – paid by the banks out of their usual 1 – 3 % of every transaction. No additional charges above and beyond what the banks usually take.

    3. Just thinking of some of the small banks in my community, I pulled one up in the browser, intending to see if they talk about this anywhere. But surprise! Front page (and I wish I could do the CSS needed to give this full effect):

      Security Alerts
      • Windows XP ALERT!

      Oh, and on their image rotator there is a PowerBook with the Apple logo airbrushed into aluminum.

      🙂 I am not making this up! But I will go check another small-town bank.

    4. I think the issue like anything that is really simple for the consumer is that it is a little more difficult in the back end. my guess is the smaller institutions are waiting to see how this shakes out before investing in the programming nessissary.

    5. There’s no hurdle. It’s just that, if you’re a humungous bank, Apple most likely came to you to get you on board at the rollout. If you’re a small bank, you’ll have to go to Apple. And while I doubt Apple would turn any bank away, each bank added means a little more development work, so it may take a while for Apple to get around to adding the banking minnows.


  6. Isn’t it a little soon to come to judgment? It’s only been a few weeks since Apple Pay was officially announced. While Apple certainly courted the major banks and credit card clearinghouses, smaller banks may not have had advance notice or inclusion. Further, smaller banks may lack the resources to simply jump on this, and no doubt, there is some back-end IT infrastructure work that would need to be done to make this happen. This often does not happen overnight. In addition, if bank branches at smaller banks do not have terminals that can accept NFC transactions, this is another cost and time impediment that needs to be addressed.

    So instead of crowing at smaller banks, encourage them. Some may be evaluating Apple Pay, while others are simply trying to budget for any infrastructure and IT needs associated with adding this as a transaction method. Given that the real impact of Apple Pay will play out over the next couple of years as a mass of consumers purchase or upgrade to new iPhones and Apple Watches, time is another ingredient.

    We’re just getting started, folks. Cut the smaller banks some slack. Lacking the resources of the big boys, they will be fashionably late. But I have not doubt they’ll come to the party.

    1. This. There is definitely IT work that needs to be done, especially if the bank doesn’t already have EMV tokenization implemented.

      And calling your bank and telling them you want Apple Pay is a good idea. If your bank is small, your voice as a customer carries more weight.


  7. There are 500+ more banks coming online in the next few months, but they have to setup their card BINs for tokenization first which is no trivial task. I work for a smaller bank that has already signed a contract with Apple and our ETA is 1st quarter of 2015 to go online with Apple Pay support for all of our cards.

      1. Holly shit the coming soon list covers every bank that I’ve ever heard of and 100’s I’ve never heard of…. So it won’t be the banking side that lags. Rather I am guessing it will be the retail side, but with the new chip requirements by the end of 2015 that will,work itself out too.

  8. apple has not excluded any bank.
    apple needs to send a team to each participating financial institution and work with them before they are allowed to participate.
    apple has prioritized its application and approval process and banks are being let in by group.

  9. Nope, not time to “cut bait.” There is way more to banking than payments. My bank doesn’t have Apple Pay, and I’m sure as hell not going to switch to a major because of that.

    I have a card with USAA that I can use for payments, but the rest of my business stays with my local bank regardless of whether or not it signs up.

    1. I hear you. Changing banks is a major pain. Having to switch things like auto-pay’s, preconfigured accounts, cards on record, etc., you can spend hours switching things. And if your a small businessman, you’d need to hire a temp to handle the workload.

  10. I am in the UK and cannot wait for the launch of Pay!

    Most retailers where I live and I visit have contactless payment (even my local Post Office), so as soon as the UK banks see sense I’ll be all over it!

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