Mobile Monday: Helping Customers Understand EMV & Mobil Payments

emv_dipThis week’s EMV “liability shift” in the United States is expected to be a boon for mobile payments. We are undergoing a massive expansion in number of NFC-enabled terminals, at a time when Apple and Android Pay are not only measurably faster than the more time-consuming “chip dip”, but also more secure. That’s a HUGE change in the “relative UX” between the two options.

Savvy issuers should seize on the negative publicity and confusion around EMV plastic cards and push NFC options, both within the native app and on desktop and mobile websites.

But from what I saw today during a tour of several dozen major bank and credit union mobile sites (using iPhone 6), very little is discussed about this change. In fact, none of the 25 largest banks address it on their mobile homepages. I finally found one mid-sized credit union that addressed EMV (First Tech Federal Credit Union) and another that mentioned Apple Pay, albeit a few screens down (Stanford Federal Credit Union), but neither of them addressed both issues (see screenshots below). Both CUs have responsive homepages, so the messaging was the same on both the desktop and mobile web.

Most issuers address basic EMV questions when sending new chip-cards to customers. But I’m guessing that:

number of cardholders who read the EMV instructions
x
the number that understood it
x
the number that remember it
=
zero

This is a good opportunity to get your cardholders on board with Apple Pay and Android Pay. And don’t forgot to help them understand how to make your card the default in the Apple Wallet (previously called Passbook). Refer to Capital One’s email explanation sent to cardholders after adding their card (screenshot below).

———–

Mobile website homepages from Stanford Federal Credit Union (left) and First Tech FCU (right)
As seen on iPhone 6 at noon, 28 Sep 2015

stanford_FCU_mobilehome 1sttech_mobilehome

———-

Capital One email sent to cardholder minutes after adding card to Apple Pay and authorizing through Capital One mobile app (28 Sep 2015)

capitalone_applepay_email2

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FinDEVr2015LogoV2DateWe will be addressing issues in EMV, mobile payments, and much more at Finovate’s second annual developers’ event, FinDEVr, 6/7 October in San Francisco.

 

Help, My Apple Pay is Not Working

applepay_launch_bofa

The last few times I’ve tried to use Apple Pay, it’s not worked. And when that happens at the POS, you pretty much look like an idiot waving your fancy phone around and smacking it against the terminal (as if that would help). So yeah, I’m that guy holding up the line, although in my defense, not nearly as long as that person that still uses paper checks.

When Apple Pay is on the fritz, besides my looking like a fool, I’m at a bit of a loss as to what to do next. I tweeted this today:

While it may appear snarky, it’s a serious question. When Apple Pay doesn’t work, there is no clear path to resolution. So here is what happened when I tried the various methods in my tweet.

A. Google it

At first glance, there seems to be promising results, including Apple Support. But alas, its FAQ makes no mention of it “not working,” but it does offer a way to get through the help topics and to an online/phone support area (see C below). And while there is much discussion on the Apple forums, the best advice was to “reboot” your phone, which is surprisingly effective for many.

Grade: Incomplete. While I was able to find Apple support within a few minutes, I had to go to the chatbot for a full diagnosis (see B below)

B. Contact Apple

applepay_support_choicesDuring my Google search, I stumbled into the correct area to get to Apple Care support (see A above). While I had to go through a few screens in the self-service area, it took only about 30 seconds to get to the one that offered a choice of online chat, call center (with 2-minute estimated wait time), or alternatively, I could schedule a call (see inset).

As always, I chose online chat. The chatbot was good (not sure if/when a human stepped in), but it took a full 13 minutes to diagnose the problem (including looking up my serial number at the outset). Apple suggested I delete the existing payment card and add the new one, which was the right answer.

If you try to figure out the problem directly on your phone, a search for “Apple Pay” within the phone, i.e., Spotlight Search, directs users to the Passbook app. If you select the “i” button for more information, you are directed to the bank’s call center (see C below). Alternatively, you can navigate directly to Settings, find Passbook & Apple Pay (below the fold), and locate the bank contact number.

Grade: C >> for the 13 minutes it took through Apple Care chat support

C. Call the bank (BofA)

I had just a single card, issued by Bank of America, hooked to Apple Pay. Although I try to avoid call centers if at all possible, I have been very pleased with BofA call center support in the past, so I called the number on the back. And while SIRI, or whatever their voice recognition is called, was not able to understand Apple Pay questions (“I hear that you want to make a payment, is that right?”) I had passed authentication and was put through to a live operator in about 3 minutes. I’d already figured out the problem during my 13 minutes with Apple Care (old card number), so I didn’t torture BofA and play dumb. But had I not known the answer already, the CSR was prepared to get Apple Pay support on the line for help.

Grade: B- >> for being able to get to Apple Pay phone support within 4 to 5 minutes (though did not test their diagnostic skills)

D. Use the mag stripe

Honestly, if I wasn’t into this stuff for my job, I would have just started using the mag-strip card and forgot about Apple Pay until v2.0.

Grade: A >> for the 5 to 7 seconds it took to get the plastic out of my wallet, swipe, and stop holding up the line

———-

The fix

bofa_applepay_dontuseAs mentioned in B above, my Apple Pay problem could be solved either through the Passbook app itself or through the Passbook settings within the iPhone Settings area.

Here’s what I saw when clicking on my “card” in Passbook (see inset).

And that was the reason why Apple Pay had stopped functioning. Bank of America had revoked my card a few months prior during a breach-related reissue.

But I’m not sure how I was supposed to know that I needed to update my Apple Pay card. I’ve searched my email from Bank of America, but I see no message from them on the subject. While it could have been trapped by the SPAM filters, that would be unusual for messages from my card issuer.

It’s completely understandable why the bank would pull my card out of Apple Pay if it was cancelled and replaced by a new number. But they either need to inform me, along with good instructions on what to do next, or better, simply replace my old card with the new one within Apple Pay, with notification of course (see update below).

But that’s probably v2.0 customer support. Until then, I’m glad there’s still a mag-stripe as backup.

—–

Update 19 Aug 2015: Apparently, Citibank is automatically replacing new card numbers into Apple Pay when the old one is canceled. Not sure if this applies to its entire portfolio or selected customers. Thanks to Ian Kar for the pointer.

Apple Pay Works (Duh), But it’s No Starbucks (Yet)

imageWell, that was anticlimactic. But I knew it would be.

Between Starbucks mobile, Square Wallet, Google Wallet and my Discover Card contactless sticker affixed to the back, I’ve made a few hundred in-store purchases with my phone.

So smartphone purchase #247 today was hardly remarkable from a UX standpoint. The only thing that would have made my first Apple Pay experience interesting would have been if it failed (resulting in a much more clickable headline for this post). But although it took three tries (note 1), the phone finally vibrated (the same as my Nexus) telling me that Apple’s NFC magic had indeed triumphed (note 2) adding 1.05 cent to its Q4 numbers (note 3).   

And although I firmly believe we are at “peak plastic” for debit/credit cards and payment via the cloud is inevitable, I don’t see how Apple Pay adds 15 BPS (or a half-cent for debit) of value to the card-using experience. But to play with Apple you have to pay. And 15 BPS is a lot better than the 30% interchange Apple has collected for the past six years on in-app purchases. So I’m neither criticizing the rumored economics, nor the 500 issuers who have signed on. For competitive reasons, you might as well play along (or not, see previous post). 

Bottom lineI’m not giving up on plastic, or merchant-specific apps like Starbucks (or MCX?), quite yet. The iPhone/TouchID experience is great, but at this point, it’s slightly more cumbersome than plastic (note 4) and costs more if you account for my tendency to drop the phone (note 5). 

And Apple Pay’s consumer value for in-store purchases will come in the future with more integration between phone, bank and merchant (note 6). Getting customers to give up plastic is all about the three R’s: rewards, receipts, and relationships (note 7). Starbucks has nailed it (note 8). Apple has not, yet.

———————–

Screenshots

My first Apple Pay in-person transaction
Left: Push notification on top of homescreen
Right: How it looks within the Apple Passbook app

image       image

————————

Notes:
1. The first time I put the phone next to a terminal, nothing happened when I authenticated with TouchID. I’m not sure if it was my phone’s failure or the cashier failed to ready the charge properly. The second time, it did connect, but I was declined with a negative “buzz” from the phone. The cashier readied the charge a third time and this one went through with a pleasant vibration and push notification on the screen. These things happen, even when swiping plastic, so I don’t hold it against Apple Pay. That said, were I a so-called normal consumer, I probably would have pulled out my plastic and waited for Apple Pay 2.0 next year before trying again. 

2. Sadly, I still had to make chicken scratches (aka my signature) on the Verifone display at Bartell Drug for the $6.99 box of tea and also have a paper receipt shoved into my hands. It’s not Apple’s fault, but it does detract from the overall UX. 

3. My $6.99 purchase times the rumored 0.15% interchange rebate to Apple. 

4. I’ve been using TouchID only a month, but so far, I find it clumsy. I have three fingerprints registered, and some work better than others, and overall, I find it can take numerous attempts to get it to authenticate. This is not something I want to experience at the front of the checkout queue. It’s bad enough that I’m standing there waving my new $600 gold smartphone at the terminal. I don’t need to be holding up the line while I fumble with said device. Once the novelty wears off, I’ll probably go back to swiping plastic, at least if there’s a queue. 

5. In addition, every time I pull my phone out, especially when juggling purchases at the point of sale, there is a chance I’ll drop it. And since I detest cases, I crack my screen every year or two. Assuming it costs $100 to fix, and I crack it once every 5 to 10,000 times I handle it, it’s cost me 1 or 2 cents to use my phone in lieu of plastic. 

6. This post is about the physical point of sale. The one-click mobile-payment process for Apple Pay-powered shopping carts and apps has immediate and understandable value for both the consumer and merchant. 

7. You could argue that the increased security from phone payments will move people off plastic. But consumers still do not trust mobile phone security, for good reason. And they know they are covered for plastic security breaches. So the known threat (plastic) probably trumps the unknown (phone) for the time being. 

8. And the Starbucks experience gets better next year when “order ahead” goes national.

Banks Gear Up (or not) for Upcoming Apple Pay Release

image If all goes well, some time within the next week Apple Pay will be up and running. Short-term it won’t cause a ripple in market share or consumer behavior (see previous post), but long-term it is likely to be seen as an important mobile-payments milestone.

Regardless, I look forward to using it. But with only a couple contactless terminals in my usual Seattle haunts, I guess I’ll be buying lots of coffee at Peet’s and Tully’s while I test it.

But I digress.

imageThe subject for today is what banks are and aren’t doing to ride on Apple’s mobile coattails. There has been little FI marketing so far, other than PayPal’s NY Times full-pager poking fun at it (15 Sep 2014, see inset). And some media buys from Visa and MasterCard.

Eleven financial institutions were named on 9 Sep 2014 at the official launch of Apple Pay: Six major launch partners listed below and five “coming soon” issuers (see note 1).

The big six have been almost silent since the first week when four of the six issued press releases, emailed customers (note 2) and/or posted promos on their websites.

Issuers may now be gearing up their marketing machines, which were caught relatively unaware last month, due to Apple-prescribed secrecy, for a pre-holiday Apple Pay push. However, I would not be surprised if major issuers, who’ve already seen contactless card-usage fizzle, take a wait-and-see approach for the remainder of 2014.

In any event, it will be interesting to watch. 

_________________________________

Apple Pay FI launch partner marketing to date
_________________________________

American Express 
   Press release: No
   Email: None reported
   Website promotion: None reported
   Website site search: Nothing listed

Bank of America
   Press release: No
   Email: One reported by The Financial Brand (link) though I did not receive it    
   Website promotion: Nothing now, but promo reported at launch by Jim Marous in The Financial Brand
   Website site search: Links to landing page (link)

Capital One
   Press release: link
   Email: One sent to my consumer account (12 Sep 2014)
   Website promotion: None reported
   Website site search: Nothing

Chase
   Press release: Quoted in Apple’s official release (link)
   Email: One reported by MediaLogic (link) though I did not receive it    
   Website promotion: Nothing now, but promo reported at launch by The Financial Brand
   Website site search: Nothing

Citibank
   Press release: link
   Email: None reported
   Website promotion: Nothing now, but promo reported at launch by The Financial Brand
   Website site search: Nothing

Wells Fargo
   Press release: link
   Email: Two sent to my consumer account (11 Sep and 19 Sep 2014)
   Website promotion: Nothing now, but promo reported at launch by The Financial Brand

   Website site search: Nothing

______________________________

Second wave issuers
______________________________

Perhaps because they are smaller and must try harder, three of the six next-wave Apple Pay issuers (note 1) have promos running on their websites today:

Barclaycard homepage (one of three promos in rotation)

image

PNC Bank homepage (in lower left corner)

image

US Bank homepage (one of three promos in rotation)

image 

———————

Notes:
1. The five other issuers mentioned at the Apple launch were: Barclays, Navy Federal Credit Union, PNC, US Bank, USAA. Yesterday, Arvest Bank announced it was supporting the system as well.
2. Despite having 10 card accounts (four business and six personal) across the six launch partners, I have received emails only from two (Wells Fargo on 11 & 19 Sep 2014 and Capital One on 12 Sep 2014).

Why (Most) Banks Need Not Worry About Apple Pay (Yet)

image I’ll admit to being caught up in the hype. The 48 hours after Tim Cook revealed Apple’s long-rumored foray into payments were some of the most exciting times in fintech since the 1995 to 1997 period when most of the online “firsts” happened (see note 1).

And we’re seeing more thoughtful fintech posts in the past week than we used to see in an entire year. Thanks especially to Tom Noyes, Cherian Abraham, Brian Roemmele, Celent’s Zilvinas Bareisis and finally today from Gonzo’s Steve Williams for helping me see beyond the hype.

I can add little that hasn’t already been said to the discussion about NFC, payment ecosystems, or the future of mobile payments. Clearly, it marks a turning point for mobile payments and improved U.S. security, and the play-out will be fun to watch.

The one area I haven’t seen covered: What does all this mean for the 10,000 U.S. banks and credit unions not on the 11-name list at launch (note 2)?

So here’s my take on the impact of Apple Pay on small- and medium-sized FIs over various time horizons: 

In the short term (2014): ZERO

In the medium term (2015-2016): ZERO

In the long run (2017+): Something, but impossible to quantify at this point
                                     (it could even be net positive)

Here’s why bank/CU execs (outside the top-20 credit-card issuers) should not lose sleep over what Apple is doing:

1. Apple Pay (in the physical world) can be used only at contactless terminals
Supposedly, there are 220,000 contactless terminals in the United States. But if you’ve ever tried to use one, you know that 200,000 of them are either not working or are buried behind beef jerky on the counter. This will change rapidly as merchants upgrade during the next few years.

2. It’s complicated to use (at first)
First, you need an iPhone 6, then you need to figure out how to use Apple’s Passbook program, log in to iTunes or take a picture of your card, successfully authorize it, enable TouchID and so on. Millions of early adopters will figure all that out, but then they won’t be able to find a working contactless terminal (see #1) and then they’ll forget all about it.

3. The number of your customers that care enough to move deposit accounts for NFC payments is near zero (for now)
Let’s do the math. Assume that a year from now there are 5 million Apple Pay active users (making at least one transaction per week) or 2.5% of U.S adults. If you have 20,000 customers, that means 500 will be active users of Apple Pay. Most will be happy to use their existing Capital One, Citi, and other rewards credit cards for the transactions. Very few will care that your debit card doesn’t work on the system. Let’s say it’s around 25%. That means you have something like 125 customers who are disappointed with your mobile payment capabilities. If they like you otherwise, how many will move their checking account to get an Apple Pay-enabled version? While the number is probably zero, let’s say it’s 5% to 10%. That means you could lose 6 to 12 customers. Using the 80/20 rule, only one or two of them are profitable. Will it hurt to lose two profitable customers? Sure, but it’s not going to be on your top-10 or top-25 list of worries.   

4. There are ways to mitigate any lost wallet share to Apple-Pay issuers
Even if my math in #3 is way off, or you are concerned that you will take a material hit to the bottom line, or you just want to be part of Apple Pay, easy routes will undoubtably be built to get your cards enabled into Apple Pay. Maybe not in 2014 (or even 2015), but certainly within the next couple years. And even if I’m wrong and you are locked out of the iPhone indefinitely, you can create an Apple Pay poaching program where your customers make their charges on a bigco bank card, then you automatically pay those charges off and essentially transfer them to your customer’s checking account.

So my final advice. If you have an employer (or spouse) that’s been reluctant to fund your iThings, now is the perfect time to do an upgrade (just don’t show them this post).

——————-

Chase homepage shown to existing customers (15 Sep 2014)
Note: All three links on bottom of page go to the iPhone6 “Apple Pay” features page at Apple.com which leads with Chase (link)

image 

——————————–

Notes:
1. Or perhaps 1999 when Paypal/X.com made P2P payments happen or even 2005/2006 when Zopa/Prosper/LendingClub launched consumer credit exchanges.
2. See Apple Pay launch event clip here, complete with transcript.

Apple Touches Off First Wave of Mobile Banking Biometrics

image We’ve known this day was coming ever since Apple acquired AuthenTec two years ago for $350 million. That was real money back in the pre-Beats/Nest/Oculus days.

Monday, Apple made it official at its annual developers’ conference: The fingerprint authentication system built into the iPhone 5S (Touch ID) will open to outside developers in the next iOS update (v8.0 expected in mid-September). That means that app publishers, including banks, credit unions & wallet providers, will be able to use it to provide initial authorization into a secure app. 

image The new feature was demonstrated on stage by logging in to Mint (see inset, screen cap tweeted by Bradley Leimer Monday). In the demo, Mint users are prompted to use the touchpad to open the app (the small type says, “Please authenticate in order to proceed”). Users are also given a password option.

Most likely, banks will use Touch ID, as well as other handset-resident biometric systems (note 1) to deliver “read-only” access to data. It’s an approach that’s been catching on around the world even before Apple’s biometric wizardry. Citibank is the most recent to provide a no-login glimpse in its mobile app (called SnapShot), rolling it out nationwide two weeks ago (press release). It’s also used at Westpac (NZ), Commonwealth (AU), Bank of the West, City Bank of Texas and many more (note 2).

For anything transactional, such as a wire transfer, banks will likely require additional authentication (see our Nine Circles of Security).

And of course, these security changes will generally need to be optional for customers until they become commonly accepted practices. Most users are still extremely wary of security on mobile phones, even though it is a marked improvement over the desktop (note 3).

While it’s too early to know if any financial institutions will have it enabled by September, one fintech payment provider, CardFlight, wasted no time, announcing support for Touch ID just a few hours after the Apple keynote (note 4).

—————————

Notes:
1. Celent’s Jacob Jegher showed me his facial recognition login on his Android phone (Samsung?) at last month’s FinovateSpring. Very cool, though he doesn’t have it enabled since it slows up the login process just slightly.
2. Malauzai Software powers more than 90 credit unions and banks alone (post).
3. See our latest report on Mobile Security (March 2014, subscription) for more info.
4. Cardflight will be showing off its latest tools at our first developer event, FinDEVr, 30 Sep 2014, in San Francisco. 

Mobile Monday: Top 50 iPhone and iPad Apps in the Finance Category

app store logo.jpg

I knocked around Apple App Store last week researching our year-end Online Banking Report. Below are the current top free finance apps in the U.S. store (note 1). While there are not a whole lot of surprises, several are notable:

  • Credit Karma maintains its top-10 ranking (#9)
  • Intuit has three of the top-10 apps (#4, 6, 8) plus #30
  • Two of the top-5 financial institution iPhone app providers (PayPal and Capital One) do not yet have iPad apps
  • Three credit-monitoring apps are in the top 32 (Credit Karma #9, Intersections #23 and Experian #32)
  • Two banks each have two apps in the top 50: Capital One (#6 and #34) and PNC (#25 and #42)
  • Five fintech startups made the top 22 (Credit Karma #9, LearnVest #15, Lemon #19, Pageonce #20, Manilla #22); all but Lemon are Finovate alums (note 2)

Methodology: I first listed the top 50 iPhone apps from the “Free Finance” category (column 2). Then I went to the iPad store and found their corresponding iPad app rank (column 3). I then listed all the remaining iPad apps in the top 50 and their corresponding iPhone rank (last 20 rows below).

———————————-

Top iPhone/iPad Finance Apps in Apple App Store (USA)

Company iPhone Rank iPad Rank
PayPal 1 none
Chase 2 3
Bank of America 3 1
Mint (Intuit) 4 5
Wells Fargo 5 2
TurboTax (Intuit) 6 31
Capital One 7 none
TaxCaster (Intuit) 8 16
Credit Karma 9 none
American Express 10 7
Discover 11 13
Citibank 12 10
USAA 13 8
State Farm 14 47
LearnVest 15 none
Yahoo Finance 16 11
Easy Envelope Budget 17 42
US Bank 18 26
Lemon 19 none
Pageonce 20 23
Fidelity 21 12
Manilla 22 none
Identity Guard (Intersections) 23 none
Navy Federal FCU 24 none
PNC 25 19
iSpending 26 116
Barclaycard 27 35
Mortgage Calc (Zillow) 28 20
TD Bank 29 none
Quicken Money Management (Intuit) 30 17
TD Ameritrade 31 27
FreeCreditScore.com (Experian) 32 55
Pocket Expense 33 15
ING Direct (Capital One) 34 none
Quicken Loans 35 none
E*Trade 36 33
Spending Tracker 37 28
SunTrust 38 none
Western Union 39 none
iSpreadsheet 40 9
BB&T 41 46
Virtual Wallet (PNC) 42 40
Bloomberg 43 22
Budget 44 none
Expensify 45 53
Ally Bank 46 none
HSBC Personal 47 none
H&R Block 48 24
Bluebird (AmEx) 49 none
Seeking Alpha 50 none
Below top 50 iPhone    
Craigslist mobile not in finance 4
Money Magazine none 6
ShareBuilder (Capital One) 114 14
CNBC 55 18
Real-time stock tracker 64 21
Vanguard 58 25
Morningstar Stockinvestor 198 29
Personal Capital 92 30
Regions Bank 54 32
Visual Budget 62 34
Merrill Lynch 84 36
Bloomberg TV 125 37
Mortgage calculator (Trulia) 102 38
SmartMoney Retirement Planner (Dow Jones) none 39
Bills for iPad (iBear) not in top 300 41
Budgets for iPad (iBear) 162 43
Checkbook free 53 44
Smart Budget 120 45
TD Ameritrade Mobile Tracker 86 48
EZ Financial Calculators 63 49
Schwab 60 50

Source: Netbanker observation of Apple App Store directly from iPad and iPhone around 6 PM Pacific, 7 Jan 2013

None = No app listed with the App Store for that device

——————————

Note:
1. The Apple ranking system is a bit of a black box. But it’s generally believed to weigh heavily recent download activity.
2. Easy Envelope Budgeting (#18) is from a San Francisco-based Web developer Dayspring Technologies founded in 1998.

Crossing Channels: Email Confirmation of Call-Center Conversations

image Someone in our house dropped their precious iPhone onto the floor Friday and cracked the screen into a hundred pieces (note 1). So after grabbing a new 4S model, I proceeded to do the online upgrade. Unfortunately, the new phone was unable to connect to AT&T. So, after a bit of Googling turned up no solid clues for a DIY solution, I was forced to dial the carrier’s 800 number.

It turned out to be an easy fix, simply reading off a pair of of 21-digit numbers from the iPhone box while the CSR flipped a few switches on her end (note 2). And I really liked the AT&T rep, who managed to be efficient yet personable (note 3), so it was a net positive experience with the carrier.

But what really impressed me was the followup email I received shortly after completing the call (see below). It outlined what had transpired and provided several useful links to help in the migration from the old phone to the new. In addition, the company wisely encouraged self-service account management with several links below the signature line. Finally, the company inserted the name of the actual rep I’d talked to at the bottom.

Bottom line: I’m a huge fan of email for financial services communications (note 4). It’s timely, it’s searchable, it’s easy to use, it’s instantly archived, it works on every device and it helps the customer feel like their bank/CU/card issuer is holding itself accountable. And if done right, it can save additional costly service calls. All this goodness for virtually no cost.

—————————————–

AT&T email confirmation of call-center service change (11 Aug 2012)

AT&T call center confirmation email

Notes:
1. I’m not naming names, but she knows who she is.
2. Memo to Apple/AT&T: If you must use 21 digits, please insert some spaces so a human can read them.
3. Even though I have a personal account, I ended up in the "Business Solutions" call center, so their may be a higher level of service in this area.
4. See our report, Email Banking: Revitalizing the Channel published two summers ago (subscription).

Apple Just Put a Mobile Wallet In 100+ Million iPhones: But Is This Passbook a Friend or Foe of Banks?

iPhone Passbook app If it wasn’t obvious already, Apple is becoming the operating system of your life. And since money touches much of what we do, it’s no surprise that the company is moving into the payments side.

Actually, Apple is already there. The most valuable company on the planet is already the biggest payments issuer, with 400 million payment-enable iTunes accounts.

Now, when iOS6 becomes available this fall, Apple will be the biggest mobile wallet provider as well, when 100+ million iPhones automatically getting one with the new OS upgrade.

The new baked-in wallet app is called Passbook, I presume because iWallet was taken, or Apple is saving it for something even bigger.

But regardless of the name, Passbook has broad implications in payments and commerce in general. One look at the UI (inset) shows what banks are up against. An app loaded with store cards! Just what a gazillion big-spending early adopters have been hoping for (congrats to Target and Starbucks for leading the way again).

The main reason iWallet Passbook is such a big deal, besides the Apple halo effect, is that it automatically opens your “virtual card” when you walk in the store. Yes, you read it correctly. Automatically. Opening. Mobile. Payment card. 

Starbucks "card" in Apple's PassbookFor example, when you walk into Starbucks its virtual store card, rendered in 2D bar code, will be triggered on your phone. You just swipe the lock-screen notification, enter a PIN (if necessary), scan your phone at the POS, drink your coffee and enjoy the perks (see below).

Is the POS experience dramatically better than using your Visa/MasterCard plastic? Not really during those 15 seconds of your life, but it’s not worse either. Shaving 2 seconds off transaction time is not what this is about. It’s the retailer value-adds that make it a huge winner.

Smart merchants will tack loyalty points/rewards/amenities (how about a free shot of vanilla in that latte?) on to Passbook-enabled purchases and you will soon be conditioned to pay with your phone. Really, just having your receipt stored safely away in the Passbook app could make the difference between using the store card vs. MC/Visa.

Because Apple wants to be platform, not a bank, they are making the tools available to developers to create apps that play nice with Passbook along with all the other iPhone utilities. So I see this as bank/issuer friendly, so far anyway, though not everyone will benefit.

While this is only speculation, I see a couple things likely to happen:

1. Proprietary single-brand (closed loop) payments make a comeback: With a direct connection to the front-screen of your iPhone as soon as you walk in the door, retailers can put together compelling in-store loyalty offers on the fly. For example, I can walk into Best Buy, and up pops my store loyalty card on the front of my iPhone. And they can dangle all kinds of bennies at me in real time, while encouraging me to pay with my Best Buy credentials rendered in a QR code on the screen (and later via NFC or a “cloud” connection).  

2. Banks and card issuers partner with retailers to become the preferred “Passbook card:” For stores that don’t want to bother with the payments piece, instead of presenting a store card with the customer walks in the door, they could present the preferred partner card. For example, Costco, which only takes American Express, could launch an AmEx Passbook card when customers walk in the door.

3. The beginning of the end for paper receipts: Users will have the comfort knowing their receipts are all accessible via iPhone (and in the iCloud). So they will opt out of paper receipts at the register.

4. Mobile offers/coupons just found a new home: If you want iPhone-wielding consumers to see your offer, Apple just created an instant place to store (and discover) deals. I’m not sure if this is good or bad for ad-supported banking, but it’s something to consider.

Bottom line: I could go on (for instance about Siri integration), but my head is about to explode with all the possibilities. Time will tell, but I think we just witnessed a watershed moment in mobile-enabled shopping and payments. 

———————————-

Recommended reading:

  • Read the full analysis by Glenbrook’s Scott Loftesness here.
  • Fantastic stuff on on Quora too (HT to Brad Strothkamp for the link via Twitter).
  • The list of all the features via Techcrunch.

30 Most Popular iPad Apps from U.S. Banks and Other Financial Services Companies

image Apple tweaked its propriety algorithm that ranks apps in terms of popularity (Cnet article). Evidently the changes had an impact on overall rankings, but little or no effect on intra-category ranks.

That holds true with my casual observations within the finance category. Regardless, it seemed like a good time to visit the App Store and document which financial iPad apps are currently most popular (see Table below).

Note: The first column below is the rank among all financial institutions (as defined below). The second column in the app’s rank within the entire App Store “finance” category.

Observations:

  • The highest rated bank is Chase at number 9 in the finance category
  • There are only two banks (Chase & USAA) in the top 20
  • There are only seven consumer banks in the top 200 (Chase, USAA, Bank of Oklahoma, Trustmark, BB&T, BBVA, Bank of Texas)
  • There are more credit unions (8) than banks (7) in top 200 in the finance category
  • Still missing some huge banking names (Amex, BofA, Capital One, Citi, Discover, Mint, PayPal, US Bank)

My methodology: Using an iPad and iPhone, I accessed the finance category of the App Store and sorted by “Most Popular.” I am including only apps from any U.S. financial institution or from third parties that tap directly into financial institution data using account aggregation (e.g., from Yodlee, CashEdge, etc.). Pure content apps, like Schwab’s On Investing magazine, were not included even if from a financial institution.

FI Rank Finance Rank Company App Name
(+ company)
1 1 Pageonce Money & Bills (free)
2 2 Square  
3 3 Maximo Cavazzani (works with
TD Ameritrade)
iStockManager
4 9 Chase Bank Mobile
5 10 Pageonce Pro – Money & Bills
6 11 E*Trade Mobile Pro
7 15 TD Ameritrade Mobile
8 20 USAA  
9 21 Fidelity Investments  
10 22 Thinkorswim (TD Ameritrade)  
11 29 Expensify Expense Reports
12 49 Mercedes-Benz Financial My MBFS
13 50 Wescom Central Credit Union Mobile
14 59 TDECU Mobile
15 67 BofAML (BofA Merrill Lynch) MyMerrill
16 68 Bank of Oklahoma Mobile
17 74 MACU (Mountain America) Mobile Banking
18 88 Trustmark National Bank  
19 96 thinkMoney (TD Ameritrade)  
20 97 BofAML (BofA Merrill Lynch) Merrill Edge
21 98 JP Morgan Mobile
22 107 BB&T Banking
23 114 thinkorswim (TD Ameritrade) VEO Mobile
24 131 BBVA Compass Mobile Banking
25 169 NASA FCU Mobile Banking
26 170 DATCU Credit Union Mobile Banking
27 182 SCU (Scott Credit Union) Mobile Banking
28 188 Bank of Texas Mobile Banking
29 193 GWCU (Goldenwest Credit Union) Mobile Banking
30 194 American Eagle FCU Mobile Banking

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Note: For more info on mobile banking, see our previous Online Banking Reports.