Apple Pay Case Study ref1.pdf - Apple Pay Case Study Nearly...

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Apple Pay Case Study Nearly every day, it seems, a new mobile payment system is announced. The mobile payment marketplace is experiencing an explosion of innovative ideas, plans, and announcements, which one commentator has likened to a goat rodeo, a chaotic situation in which powerful players with different agendas compete with one another for public acceptance, and above all, huge potential revenues. It’s a battle among the titans of online payment and retailing: PayPal, credit card companies like Visa and MasterCard, Google, Apple, startup tech companies like Square that offer mobile credit card swiping backed by millions in venture capital, and even large retailers like Walmart, Best Buy, and Target, all of which are developing their own mobile payment systems that they control. Although consumers still prefer to pay with credit cards and cash on the go, digital mobile payment systems may finally be poised to deliver on their long­awaited promise. Apple entered the fray in 2014 with its announcement of Apple Pay for iPhone 6 smartphones, joining Google and others that already had developed a mobile payment system using Near Field Communication (NFC), a short­range radio communications protocol that operates within a range of a few inches, and allows consumers to bump, swipe, or just come close to a merchant’s NFC reader to pay for goods and services. What’s different about Apple’s announcement of an NFC­based payment system is that it’s Apple—the firm that revolutionized five different industries and introduced the first smartphones, forever changing how people shop and communicate with one another. Apple’s iTunes store already has the credit card information of 800 million users, arguably the largest such collection on earth. In 2015, Apple introduced its Apple Watch, which also includes Apple Pay. Apple Pay is more than an app or a smartphone feature—it’s an ecosystem unto itself. Apple has developed relationships with many of the key players in the payment ecosystem, including credit giants Visa, MasterCard, American Express, and Discover, as well as 11 large bank credit card issuers including JPMorgan Chase, Bank America, Citigroup, and Wells Fargo, which together account for 83% of U.S. credit card payment volume. Apple has also signed up national merchants such as Walgreens, Duane Reade, McDonald’s, Disney, Macys, Bloomingdales, Staples, and Whole Foods. Groupon and Uber have integrated Apple Pay into their systems. Unlike the introductions of other mobile payment systems, which tended to reflect the self­interest of those making the introduction, Apple’s approach is much more inclusive of the major stakeholders in the marketplace. Target, Walmart, and Best Buy are missing the Apple party because they are developing their own mobile payment systems.
Security is a central issue for all payment systems, and given the evident lack of security for Internet­connected devices and databases, payment security is a major concern for consumers and banks and merchants. The Apple announcement came

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