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Here are my thoughts on the proposal and impacts it may have.
The two most important things in the proposal
NFC-access on iPhone (free)
“To allow third-party mobile wallet and payment service providers to access (..) the NFC functionality on iOS devices free of charge.”
The main problem for other mobile wallets in iPhone is no access to the NFC-chip. Only AppleWallet and ApplePay can offer fast and user friendly tap-to-pay in payment terminals. Everyone else have to pay via scanning QR-codes. A slower and cumbersome user experience compared to ApplePay, and hence no meaningful user adoption.
According to Rune Garborg (CEO at Vipps MobilePay), the fact that the QR-workaround did not gain traction might have been just what the EU needed to prove that competition was restricted.
Apple will allow “Additional features”
“To provide additional features and functionalities, including defaulting of preferred payment apps, access to authentication features such as FaceID (..)”
This is a big one!
Without this, an open NFC-chip would matter a lot less. If at all.
It will enable users to change the default app that opens when they double clicks the side button. The user switch to another payment app like Vipps MobilePay, and have that app authenticate the user with FaceID on launch. The only thing left would be to tap the card-terminal and you are done.
Equal user experience as ApplePay. Equal competition.
So far, so good.
Will it matter?
The tech press and banking industry is filled with phrases like “users should be free to choose which wallet they are paying with”. This assumes that they actually want more to choose from, and I think this is a dangerous and rather common assumption. Most of us welcomes competition, but at the same time we just want to get on with our day.
Assuming the user already use ApplePay - why would users bother to change this? Remember that some users have changed bank to get or keep ApplePay, or added their cards to a third party app like Curve to get the functionality.
Rumors say that customer support in the biggest Norwegian bank (not supporting ApplePay) recommends Curve to their clients that wants ApplePay.
There needs to be a meaningful advantage for the user to switch.
Getting the same from someone else will not be enough.
For the sake of neutrality, let’s call it “OtherPay”. I can understand that “OtherPay” wants me to switch and select them, but as a user - why switch?
Valid reasons NOT to switch to “OtherPay”
Why change something that works?
Why give a third party my payment data?
It will not be cheaper for me
It will not be faster for me
It will not be easier for me
It will require work on my part, yet achieve exactly the same
But, the user can do all payments from the same app!
A strong business opportunity, but I am not sure users need this. We are used to switch apps to solve different things. This argument is similar to the PSD2-era and many tried to unify accounts in multiple banks on one dashboard. Users divide their economy on purpose.
Meaningful advantage?
Which benefits could be added to “OtherPay” to enable meaningful reasons to switch?
This is a collection of functionality found across Bulder, Curve, Monzo, Lunar, Revolut and Klarna.
Kickback on purchases
Collect OtherPay points or actual cash on all or selected vendors. This could favour OtherPay over ApplePay.Multiple cards and "timemachine"
Add all your cards, change active card or use Time Machine to go back in time and switch source of payment.Membership wallet
The usual question when purchasing something these days is “are you a member?” with recitation of your phone number to get the discount and/or a digital receipt. VippsMobilePay has already some functionality in place and have potential to collect more memberships and possibly register automatically if using VippsPay.Easy checkout
Pay, identify yourself, share name, address and contact info to shops or webshops + sign up for memberships. Vipps MobilePay has some of this, but a stronger connection to memberships and checkout could be a boost.Buy Now, Pay Later (BNPL)
Add “Klarna-ish” 30 day free credit or split payments. Klarna recently added a Klarna Card with ApplePay/GooglePay support, so they are also moving into payments on terminals too.Checkout for webshops
A developer friendly Checkout-module could increase adoption and usage on websites, especially combined with BNPL.MySpending
All purchases visualised and sorted in categories, locations etc. My year in "OtherPay" similar to Monzo and Spotify is whimsical fun that can be added to boost sharing in social media.Subscriptions
Add your OtherPay card to all your subscriptions and have easy overview of recurring payments + ability to cancel what you no longer need or use.Travel expenses
Pay with OtherPay on work travels, take photos of receipts and export a PDF with everything to get refunded when back at the office.Low currency FX-rates
Provide a better FX-rate on currency than the card in the AppleWallet to push for advantages in online shopping or travel abroad.Travel advantages
Studies on credit-card selections often boils down to advantages the user gets while using the card on travel - I believe that wallet-selection will have similar drivers. “OtherPay” is not a wallet (not a card), but things like travel insurance and airport lounge access is sought after things that could push adoption.
Cool stuff, but because it already exists at other apps this is what I would call "hygiene-functionality". The users expects to get this. They would not be too impressed. Having this would put "OtherPay" equal to the competition. No ahead.
A new era of payment innovation?
According to statcounter.com Android had 70% of global mobile market share, and Apple iOS about 29% (December 2023). However, if you look at selected countries - the Apple market share in the US is 57,93%, Japan 68.86%, Canada 60.31%, Australia 59.63%, and the United Kingdom 52.29%.
About 1/3 of the global mobile wallet market is closed off.
Remember that only tap-to-pay have been closed, yet the result was lower interest in creating global mega-payment solutions. There will no longer be a wall between iOS and Android. There will no longer be a huge part of the market unavailable. We will move into a new era of global competition and innovation. Perhaps also cross border payments!
The walled garden opens
I really understand that Vipps MobilePay wants to be your default wallet, but it is important to remember that they will not move into the AppStore alone. My guess is that global players like GooglePay and GoogleWallet will be there along with updated apps from PayPal, Venmo, Cash, Visa and MasterCard. Meta and Twitter/X are also looking at payments and banking, so maybe something new from them too.
Another perspective
Let’s look at this from another perspective. What can "OtherPay" do without replacing the default wallet?
One card to rule them all
Why not create an app with a virtual card that supports ApplePay and GooglePay. Skip the plastic, skip the metal card, skip trying to change user default. The Wallet is only open when paying anyway.
Vipps MobilePay already have users cards and accounts in the app. Add a virtual card on top and add that to ApplePay and GooglePay. Collect memberships and benefits in the app. Curve has done a lot of innovation here, but I think they have slowly broken their app. Vipps MobilePay could have success with this approach (and hopefully income).
One account number to rule them all
The other side of cards and payments is accounts. Where the money lives.
What if OtherPay added a virtual account number and let you route inbound payments to your real account(s) - similar to what Vipps MobilePay does with P2P payments and your phone number.
Register the virtual account number with your employer or the government. Change bank as many times you want, while the account for incoming money would stay the same.
Rules could even be set to route payments to different accounts.
Skip the card terminal, skip the NFC, skip the problem
A physical device to scan a plastic card or your phone should not be required to pay. In fact, it is not. Turns out, the phone is a perfect payment device on its own. It is also a camera, a bar code scanner, location aware and can authenticate you and so on.
Let’s say you walk into your local grocery store to pick up a few things for dinner. You open OtherPay and scan the barcodes on your items. The app recognises which shop you are at, registers your membership card, applies discounts and opens a tab in the store.
When you are finished you go to the checkout booth, tap “Pay” and FaceID authenticates payment. A QR code is displayed in your app, you scan it to open booth and you go.
No queue.
No NFC.
No problem.
Imagine how awesome it would be if only a few grocery chains adopted this!
This approach would obviously not work everywhere, so tap-to-pay must also be an option on regular points of sale. I just find it strange that the card terminal is the main "problem".
Understand shopping and households
A household needs some sort of list to do the shopping, just see what the grocery chains are giving away. Why not add a shared shoppinglist to the wallet? That could tie the user in even more. What if items was sorted the same way they appear as you walk through the store? Or campaign items that pops as notifications when you enter the store?
Some memberships are personal, yet it makes no sense to a household. Sometimes I do the shopping, sometimes my partner does. Households should collect points and get discounts and cupons together. Yes, I am looking at you Rema 1000.
BankAxept, a dark horse
Most people in Norway have seen the BankAxept logo on their cards, but have little idea what it really means. BankAxept is a Norwegian payment infrastructure and all supported by all Norwegian cards. Payments processed via BankAxept is significantly cheaper for the vendor compared to foreign processors*.
BankAxept are working with Apple to enable processing via BankAxept on supported cards used in ApplePay. The plan was to enable this before Christmas 2023, but so far we have seen no news on when this will launch. Or has it?
BankAxept processing on ApplePay, GooglePay and "OtherPay" is good for everyone in Norway, no matter which wallet we end up paying with. Some say it might also open for ApplePay from DNB, but who knows.
BankAxept is also working on similar support in Android-based wallets.
* BankAxept is not relevant for banks outside Norway. For the end user the payment processors are invisible, but the vendors will pay much lower fees. This change should therefore create a more positive attitude towards ApplePay. Innovation, but for whom?
Innovation in finance
Most users are notoriously lazy when it comes to banks (and insurance). If it works, why change? Users cannot bother with the cognitive work required to switch.
A lot of "innovation" in finance is done from internal perspectives and business goals, and not from the user. Sometimes the best innovation comes from a deeper understanding of the user, and not necessarily what they say. Bulder from Sparebanken Vest and their "mortgage with auto-lowering-interest rates" is a good example on deep user understanding. No user ever said that.
Innovations that wants to move large numbers must solve needs.
Vipps
The Vipps launch and growth is perfect. Before that, paying other people usually meant giving them cash. No one remembers their account number - not then, not now.
The problem was that sending money was too hard, too much "bank". Vipps solved that! Vipps had an excellent name and effective marketing campaign. mCash was another Nowegian app that did the same thing as Vipps, but no mass adoption.
I also think that regular additions of new functionality like donating money to charity or paying for waffles at your kids soccer tournament expanded usage and love for "Vippsing" money. Remember, users just wants to get on with their day.
Experts
If you don't solve needs for users, you don't innovate the right things.
Stacc has a team of experts in user experience and business development. We are ready to help, push and challenge your next innovation even further. Getting outside input is a good way to validate ideas, prototype, test alternatives and be forced to answer the questions only someone outside your organisation will be able to see.
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Disclaimer
I have not done any compliance or legal studies on ideas and functionality in this article. Some of the things I am suggesting might not be viable or even legal, but that is not the point. It is simply my ideas and thoughts on payments, wallets, innovation and changes coming to the sector.
Mentions
Android
On Android-devices the NFC-chip has always been open, and here the most popular apps are Google Wallet, Google Pay, Samsung Wallet and Samsung Pay.
P2P
Peer-to-peer payment
MobilePay
MobilePay was launched in 2013 by DanskeBank and quickly became a P2P standard in Denmark and Finland.
Vipps
Vipps was originally a DNB initiative and launched in 2015 gaining massive use adoption. In 2017, 106 Norwegian banks joined and Vipps, the P2P standard in Norway.
Vipps MobilePay
Vipps MobilePay is the result of Vipps from Norway and MobilePay from Denmark joining forces to become stronger and fight global competition from Apple, Google and others. Vipps MobilePay has over 11.5 million users.
