iPhone 6 – Payment Update – Sept 2014

Super short post that summarized my 20 odd tweets this week. Frequent readers should skip to last section “New G2”

Feel 100% comfortable with my March Predictions iPhone 6 – Payment Predictions, only thing I missed was release date (September 9th… not October).

Looks like Apple got squeezed into the bank box. As I related in Apple… Payment via BLE/Beacons will still happen (but when is issue) Apple wanted to launch the payment product with BLE (not NFC) but existing payment networks didn’t want to cause merchant chaos in fragmentation of acceptance infrastructure.. so pushed apple back into the NFC mold.  The payment experience is as I outlined in May Apple iBeacon Payment Experience. I don’t see ereciepts as part of launch.

Also confident in my predictions that Visa and MA are running the TSP (see iPhone 6 – Payment Predictions)


  1. Consumer walks up to cash register, a payment terminal beacon provides information to Apple payment application that it is close proximity to payment terminal ID xxxxx (TID),
  2. Merchant scans goods for purchase. No mobile processing of loyalty, coupon, discount information
  3. Merchant payment terminal cannot send total amount due since it does not have Apple handset information/UUID. So how will Apple do it? My guess is Apple will provide UUID to the Payment Terminal via BLE at application wake up to perform a “lite” checkin with payment terminal. Good news is that there would be no data connectivity requirements, but it requires a new payment terminal… For everyone else.. there is no total amount due (99% at launch).
  4. Legacy NFC. At application wake up,  phone asks “pay merchant with Apple wallet”?
  5. Consumer validates transaction with fingerprint biometric
  6. Consumer taps phone (NFC) and Card token presented Payment Terminal via NFC Merchant processor routes token to payment network which translates and routes to bank for authorization
  7. Payment is authorized (as happens today).


  • Launch customers in payment likely to include Macy’s and Nordstrom
  • Apple will also likely launch with Starwood Hotels for hotel room door key provisioning (as I tweeted last week)
  • Apple was able to get 15-25bps from top 5 issuers (JPM, C, COF, BAC, Amex). These are the only issuers that will work at launch. As part of this fee, Apple will release token assurance information (see Token Assurance – Updated)
  • Apple will also launch an eCommerce/mCommerce buy button in EasyPay. This will NOT receive any card present or preferential rate. This is less a function of in App purchases and more a function of 3rd party ecommerce sites having a EasyPay button for fast IOS checkout. Will in App purchases have this as well? Good question, seems logical
  • The following cards are provisioned into Apple’s secure enclave at time of manufacture/OS loading: Visa Debit, Visa Credit, MA Debit, MA Credit, Amex, China Union Pay.  (NO DISCOVER)


  • What will apple do for all the iTunes cards not from one of the top 5 issuers. That will be a rude experience. How will they enroll 3000+ issuers into this scheme and get each one to cough up 25bps
  • What is pricing on debit. Technically everyone will support debit, but no one is incented to make it work.
  • Don’t know how Paypal will run in this model.. so this is a mystery, particularly with launch of EasyPay.. will Paypal be a whitelabel here? I am confident that Paypal will be part of launch.. what I don’t know is how..
  • How will Apple ensure they get 25bps from the banks, they have no insight into the transaction.. the card is presented and that is the last Apple sees of it. This has been a problem for other wallets as well. It is one reason why google created the proxy card.. to see all the transactions.

Updates Sept 8

  • Enrollment, looks like Banks will be supporting a BarclayCard/Google Wallet like enrollment process from within online banking.. This is very, very smart.
  • Bank of America, Citi and Wells are all rumored to be supporting Debit card inclusion in Apple wallet day one..



7 thoughts on “iPhone 6 – Payment Update – Sept 2014”

  1. Tom – not seeing where the “magic” is in this play by Apple….It seems to be a meat and potatoes function and we are back to the “why” as in why would a consumer use this versus pulling out their card at the POS? And what’s the upside for Apple in all of this? Idk this seems pretty mundane and we will see what Apple brings to the table next week…..as a consumer this has no upside for me versus my old school plastic….and yes the whole use case of forgetting your wallet and using your phone to pay I get that but lots of people didnt (see Home Depot PayPal Open Hands pilot)…awesome blog BTW! THX! Jeff

  2. “What will apple do for all the iTunes cards not from one of the top 5 issuers. ”

    Put them into Passbook with a barcode to present the PAN and other details to the acquirer? That way, they will go through as a CNP transaction. The merchants will soon begin to incentivise the use of iWallet over Passbook and then consumers will put pressure on their bank to join the programme.

    Surely, eventually, Apple will bypass Visa/MC and go straight to the banks (ie, MCX but run by Apple, not the merchants themselves).

    1. Dave.. think this is a top 3 question.. “Consumer.. too bad you didn’t have another type of card.. either wait till your issuer agrees to pay us… or go get one of the cards we support”.. what a TERRIBLE message!!

  3. What do you think the iTime element of things could bring to the party? Would the fingerprint validation be moved to the watch or would consumers now be using two pieces of hardware (iPhone 6 and iTime) to complete the purchase? It will be interesting to see how things flow since one consumer experience will be established with launch of iPhone 6 and then change when the iTime is available in early 2015. I’m not seeing any reports that a touch sensor is involved with iTime (but hardware specifics are just starting to leak out) but anything is possible at this point I guess. Great insight.

  4. Kar and Noyes outline an Apple system that will support select credit and debit cards initially, and an initial set of partnerships with some big retailers. Presumably, Apple plans to aggressively expand both in the future. The transactions will make use of an NFC chip in the new iPhones and, as mentioned, the TouchID fingerprint sensor. Noyes expects Apple to extend payments via Bluetooth Low Energy (BLE) and its iBeacon specification at some point in the future.

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