The Ultimate Showdown: How Apple is Disrupting the Financial World with Digital Wallets 📱
Unravelling the Fierce Competition Between Apple and Banks 🏦 for Control of Your Digital Payments 💳
When you pay for your morning coffee, do you reach for your wallet or your phone (with a digital wallet)❓
A normal wallet is still what most people prefer, but digital wallets like Apple Pay, Google Pay and PayPal have become more popular over the last several years, especially for online payments. And that’s making the banks whose cards are in your physical wallet worried. 😦
As Chase CEO Jamie Dimon said about the growth of new financial technology in 2021:
“Absolutely, we should be scared about that”.
Apple is one of big banks’ biggest threats, and here’s how the tech company is encroaching on traditional financial territory and how banks are gearing up to fight back.
We’ve created an entirely new payment process, and we call it Apple Pay. — Tim Cook
Tim Cook is Apple’s CEO and a member of Apple’s executive leadership team. Learn more about Tim.www.apple.com
Apple has finally made its long-awaited leap into mobile payments. The iPhone and iPad maker held another one of its…www.zdnet.com
When Apple Pay was introduced in 2014, it wasn’t the first digital wallet, but it had a big advantage over its competitors, the iPhone.
Today Apple Pay is activated on 78% of iPhones in the US.
If you want to use an iPhone in store, it’s very difficult to use a different wallet (like when you tap and pay at the register) than Apple Pay.
Banks make money on debit and credit card purchases from interchange fees, which merchants pay to the bank that issued your card when you shop with it. Those fees are usually 1–3% of your purchase when you shop with a credit card. 💳 So if you buy that coffee for $5 and your credit card has a roughly 2% exchange fee, the bank gets about $0.10. But if you use Apple Pay, the bank has to pay three quarters of a cent to Apple.
Rather than pocketing $0.10 on the five-dollar transaction, the bank would instead keep just over $0.09. On one small transaction, that doesn’t seem like much, but it adds up. In fact, Apple took in an estimated $782 million from ApplePay last year.
Initially, it was like, well, better to be on board with this and have our cards used on Apple Pay than be cut out completely, because if we don’t play ball, what could happen? Could Apple develop some other mechanism that cuts out cards?
Fees Apple collects from Apple Pay make up only about 1% of the company’s revenue from services. That includes things like the App Store, Apple Music, and iCloud. But that number is growing. 📈 It’s estimated that the amount Apple Pay collected nearly doubled between 2020 and 2022.
But it’s not just money that banks are losing to Apple; it’s name recognition.
It’s not good enough for the banks to be the underlying card that’s used on one of these third-party wallets. Their concern is that once you lose that entire experience, it’s just a slippery slope from there, where eventually you’ll have a tech company that is actually the lender, and they don’t need you behind the scenes. And Apple Pay isn’t the end of Apple’s ambitions with consumer payments.
But we want to take the Apple Pay experience even further. — Tim Cook on March 25, 2019
In 2019, it partnered with Goldman Sachs to create the Apple Card, and in March, it began rolling out its own Buy Now, Pay Later program. Apple’s subsidiary, Apple Financing LLC, will be the lender, effectively taking over the role that many banks and other financial institutions would usually take. ✅
The simplicity of Apple. In a credit card. With Apple Card, we completely reinvented the credit card. Your information…www.apple.com
Launched in 2019, Apple Card delivers greater control, transparency and privacy to consumers. In August 2019, Apple and…www.goldmansachs.com
And now that consumers are getting used to engaging with Apple for their payments, it doesn’t seem so far-fetched, right, that consumers would be interested in engaging with Apple on a deposit account or some other type of payment mechanism. An Apple spokeswoman declined to comment, but banks have also introduced their own new technology in the last few years. Many have rolled out tap to pay cards with similar technology to your phone, which makes it just as easy to check out in store. ✅
Now they’re preparing to compete with Apple in online payments too, with a digital wallet of their own called Paze. 💳
This is a very clear-cut example where the banks have kind of had enough and are trying to figure out a very specific way to compete against Apple Pay and PayPal. The new wallet will be operated by a company owned by these seven major banks: Chase, Wells Fargo, PNC, Truist, Capital One, Bank of America, and US Bank. Paze will allow customers to access eligible debit and credit cards by entering an email, potentially speeding up the online checkout process. Still, the banks will only succeed if people actually use it and merchants agree to accept it. After all, this isn’t the first time banks have tried to launch their own digital wallets.
Chase shut down its app, Chase Pay, in 2021, in part because of the limitations of the iPhone, according to people familiar with the matter. 👀 We talk about consumer behaviour and shifting that behaviour. Right now, people are very used to paying with Apple Pay, PayPal, etc. There have been tonnes of wallets that have launched in various forms over the years, and they have failed to gain traction. ❌
As banks try to compete with their own digital wallets, tech companies are trying to create apps for more than just payments. 👍 What is certain is that the battle between banks and tech companies will continue until a winner emerges. Everybody is convinced that there will eventually be a small number of super apps that control consumer payments and financial services. So now they’re basically duking it out to figure out who it’s going to be.
Final thoughts! 👽
Do you use a digital wallet❓ If so, I’d love to hear about your experience. Share your preferred digital wallet in the comments below, and tell us what you love about it! 💳💻💰
Personally, I love using Apple Pay and Wise. 😜 If you use the link below, you’ll get a fee-free transfer up to £500 when you sign up 👇.
Thank you for taking the time to read my post. 👀 I hope you found it informative and engaging.
Don’t forget that your feedback is valuable to me, so please don’t hesitate to share any further thoughts or comments you may have. If you enjoyed this post, please feel free to share it with your friends and colleagues.
Are you currently exploring the benefits of digital wallets❓
Share your own experience and join the conversation about the future of money and transactions! 🤑
Happy Easter!! 🥚🐰
Images provided by author via Dalle 2, Canva PRO, Wikimedia & Unsplash ✅
Navigating the Digital Payment Galaxy: Your Ultimate FAQ Guide! 🚀
Hey there, digital nomad! Ready to embark on a thrilling journey through the cosmos of digital payments? Fasten your seatbelts, because we’re about to blast off into a universe of knowledge, answering all your queries, sprinkling in some fun facts, insider tips, and yes, even a few belly laughs along the way. Let’s hit the ignition!
Digital payment method? Break it down for me! 🤔
Imagine this: you’re at a bustling bazaar, but instead of wrestling with cash or cards, you whip out your phone, tap a few buttons, and boom! You’ve paid for your treasures. That’s digital payment for you, my friend. It’s like having a genie in your pocket, granting your payment wishes. 📱💸
What’s a digital transaction?
A digital transaction is like a secret handshake 🤝 between your bank account and the seller’s. It’s a secure exchange of digital gold that happens over the internet. Think of it as sending a message in a bottle, but instead of a note, you’re sending digital doubloons. 💌💰
Can you give me some examples of electronic payment?
Electronic payments are like the Justice League of the financial world, each with their own unique abilities. 💪 You’ve got the veterans like credit and debit cards. Then there’s the rookies like PayPal, Venmo, and Apple Pay. And let’s not forget the enigmatic Bitcoin and other cryptocurrencies, the masked heroes of the bunch. 🦸♂️
What types of online payment are out there?
Online payments come in all flavors. There’s the classic card payment, the handy mobile wallet, the convenient bank transfer, and the futuristic cryptocurrency. It’s like a candy store of payment options, and you’re a kid with a sweet tooth! 🍬💳
How do I get a digital payment?
Getting a digital payment is as easy as a Sunday morning. 🌞 You just need a bank account or a credit card, and a digital wallet or payment app. It’s like getting a golden ticket to the chocolate factory, and the ticket booth is right in your pocket. 🎟️
How do I pay with my card digitally?
Paying with your card digitally is as simple as pie. Just enter your card details into the payment app or website, confirm the payment, and you’re all set. It’s like playing a video game, but instead of slaying dragons, you’re making payments. 🎮💳
How long does a digital payment take?
Digital payments are faster than a greyhound chasing a rabbit. 🐕💨 Most transactions are instant, but some can take a few minutes or even a few days, depending on the method and the banks involved. It’s like waiting for a pizza delivery – sometimes it’s at your door in a jiffy, other times it takes a bit longer. 🍕
Do digital payments need a bank account?
Most digital payments do need a bank account, but not all. Some digital wallets and cryptocurrencies let you store and transfer money without a bank. It’s like having a secret treasure chest that only you can access. 🏦💰
Is digital payment the same as online banking?
Digital payment and online banking are like two sides of the same coin, but they’re not identical twins. Online banking lets you manage your bank account online, while digital payment is all about making payments over the internet. They’re like siblings – similar, but each with their own unique personality. 👫
What’s the difference between mobile payment and digital payment?
Mobile payment is a type of digital payment that’s done using a mobile device, like a smartphone or a smartwatch. It’s like the difference between a puppy and a dog – all mobile payments are digital, but not all digital payments are mobile. 📱➡️💻
What’s the most popular digital payment system?
The most popular digital payment system is like the homecoming king of payments. In many countries, that title goes to PayPal, but other systems like Alipay, WeChat Pay, and M-Pesa also have their loyal followers. It’s like a popularity contest, and everyone has their favorite. 👑
Is PayPal a digital payment?
You betcha! PayPal is a digital payment system. It’s like the Swiss Army knife of payments – you can use it to pay for goods, send money to friends, and even receive payments. It’s a true all-rounder. 🛠️
What’s the most common payment method?
The most common payment method varies from place to place. In some countries, cards are the reigning champs, while in others, mobile payments or cash take the crown. It’s like a game of thrones, and the most popular method changes depending on where you are. 🌍
What’s the payment technology in 2023?
In 2023, payment technology is more advanced than a spaceship. We’ve got contactless payments, biometric authentication, and even payments using augmented reality. It’s like living in a sci-fi movie, and the movie is real. 🚀
Are digital payments secure?
Digital payments are as secure as a fortress. They use encryption and other security measures to keep your money safe. But just like you wouldn’t leave your castle gates open, you should always use trusted apps and keep your information private. 🔒
What’s the safest digital payment?
The safest digital payment is like the safest house – it depends on how you use it. All major payment systems have robust security measures, but you should always be careful with your personal information and watch out for scams. It’s like living in a neighborhood – always lock your doors and be aware of your surroundings. 🏠
Is PayPal safer than Zelle?
PayPal and Zelle are both safe, but they have different safety features. PayPal offers buyer protection, while Zelle is best for sending money to people you know and trust.
It’s like choosing between a helmet and knee pads – both protect you, but in different ways. 🛡️
How safe are digital payments?
Digital payments are safe, but like a treasure island, they need to be protected. Always use trusted apps, keep your devices secure, and never share your personal information. It’s like being a digital pirate, but instead of a parrot, you’ve got a strong password. 🏴☠️
Is electronic payment safer than cash?
Electronic payments can be safer than cash because they leave a digital trail and can’t be lost or stolen like physical money. But like a castle, it needs strong defenses – in this case, good digital security. 🏰
Is digital payment good?
Digital payment is like a good cup of joe – it makes life easier and more enjoyable. It’s fast, convenient, and can be done from anywhere. But just like coffee, it’s best used responsibly. ☕
Why is cash payment better than digital payment?
Cash has its charms. It’s accepted almost everywhere, doesn’t require a bank account, and can be easier to use for budgeting. It’s like a trusty old pair of sneakers – it might not be the flashiest option, but it gets the job done. 👟
Why is physical cash better than digital?
Physical cash can be better than digital for some folks because it’s tangible, widely accepted, and doesn’t require Internet access. It’s like a vinyl record – there’s just something satisfying about the physical experience. 🎵
What are the downsides / disadvantages of digital payments?
Digital payments aren’t all sunshine and rainbows. They require Internet access, can be vulnerable to scams, and can make overspending easy. It’s like a roller coaster – it’s thrilling, but not without its ups and downs. 🎢
What are the pros and cons of digital money?
Digital money is like a seesaw – it has its highs and lows. On the high side, it’s fast, convenient, and can be used anywhere with internet. On the low side, it can be vulnerable to scams, requires internet access, and can be confusing for some folks. It’s a fun ride, but not without its twists and turns. 🎠
Should digital payments replace cash?
That’s like asking if cars should replace bicycles. Both have their place, and it really depends on the situation. For now, it seems like a world where both coexist is the most likely scenario. 🚗🚲
Will cash become obsolete and our future cashless?
That’s like asking if books will disappear because of e-books. While digital payments are on the rise, cash still has its place, especially in areas with limited Internet access. So for now, cash isn’t going anywhere. 📚
Is a cashless society inevitable?
A cashless society might seem inevitable, like the sunrise, but it’s not quite that simple. While more and more people are using digital payments, cash is still important for many people and in many situations. So while a cashless society is possible, it’s not a sure thing. 🌅
Do banks benefit from a cashless society?
Banks in a cashless society are like surfers on a wave – they can ride it to success, but they need to balance carefully. Going cashless can reduce costs and increase efficiency, but it also requires investment in technology and security. It’s a thrilling ride, but not without its challenges. 🏄♂️💼
Is electronic payment safer than cash?
Electronic payment can be safer than cash because it leaves a digital trail and can’t be lost or stolen like physical money. But like a castle, it needs strong defenses – in this case, good digital security. 🏰
And that’s a wrap! We hope this guide has shed some light on the world of digital payments.
Whether you’re using cash, cards, or crypto, the key is to stay safe and make smart choices.
Happy spending! 💸🎉
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