Update 13 March 2011

It would seem that there is some amount of disconnect between the bank eCommerce, debit and inter bank teams. The banks are working on a new interbank P2P service. This service will be based on ACH and follows on to what was pulled from the BAC/WFC Pariter scope last year. My guess is that JPM is also a “partner” and is committing to directory integration just as it is with CashEdge (Citi, 5th 3rd and 200 odd banks).

The Visa Money Transfer commitment may be an “accident”, and the banks may not know that Visa is working with Apple. This Visa service would clearly compete with the new bank owned service.  

11 March 2011

In previous blog I spoke about Apple and NFC, although I still don’t know if Apple’s wallet will be ready for the iPhone 5.. it does seem that they plan to launch with a P2P transfer system powered by Visa (See previous blog on Visa Money Transfer). Apple’s iTunes wallet does not “store” funds like PayPal nor Apple does have money transfer licenses. It was therefore searching for a way to allow consumers to pay each other. News I have is that they have selected Visa Money Transfers for this. Is it the only way? perhaps not… but I give it 90% confidence of being in scope for wallet launch.  (Sorry for the confidence thing.. it was Gartner Group’s way of making shit up)

I just can’t believe that bank payment heads are allowing this. I was on the phone with the head of debit for 2 of the top 5 banks..  their eCommerce teams love the idea of partnering with Apple.. but the debit cards head have said “no way”.  It is just a terrible idea for banks to give Visa a way to circumvent ACH.. and it will be very, very hard to shut down once it gets moving. Reasons:

• – Visa runs it.. Continues to build Visa brand on your ACH
• – You own the risk, Visa develops new services
• – Circumvents all of the industry controls on ACH (ex. TCH, Early Warning)
• – Unfunded Reg E research burden and consumer support reqs.

The big banks that have taken the plunge are JPM and BAC. Not sure if both have committed on debit AND credit.. or just credit. The business case for credit is pretty solid and I don’t have any issues here, but allowing Visa to control transfers on debit is not in the best interest of banks. Why would banks want to allow Visa to develop a consumer directory and a new service that directly competes with ACH (see blog)?

Bankers, my recommendation is to buy Interlink or Star and put it in TCH… then run the this debit service there.

Start ups.. I would not focus on payments in Apple’s platform. Think there would be new opportunities in intgrating POS to Apple’s payment mechanism, or even a “billtomobile” kind of function where you can pay online with your apple ID.  My head is spinning at the chaos this will cause within ISIS AND each carriers own billtomobile efforts. Apple is near a tipping point with the carriers. I would expect them to start aggressively pushing a much more friendly Android model.