Wednesday, 29 October 2014

Mobile Money, Apple Pay And Disintermediation

Credit cards Français : Cartes de crédit Itali...
Dead. Yeah. Dead.
Funny, I started yesterday with a post about mobiles and ended it talking about disintermediation. Hence a new post.

Disintermediation is what the Internet does to people who are selling privileged access to things. The Internet destroys privileged access. So, for instance, if you are in PR and selling media relations, I can use online tools to access journalists and I don't need you. If you're an ad agency selling creativity (it can be crowdsourced) or media booking (click, click hellooo), I can DIY, thanks. If you're a journalist selling me access to events (all my pals are filming it and sharing the videos on Twitter, thanks). Or a travel agent selling me airline tickets (click), a bookshop (click) or any other number of people taking my money for giving me something I can do using the Internet, you're dead meat. Perhaps not today or not tomorrow, but soon enough.

I was talking about it in the last of the Bookshop DIFC writing, editing and publishing workshops (thanks, chaps, I had a lot of fun and nobody's sued, so that's good) last night. I was trotting out my old catechisms - "Quality is irrelevant when technology improves access" and "The Internet destroys privileged access" - in relation to the ongoing destruction/transformation of the booky book publishing business.

The mobile's done the same, of course. I remember with painful clarity being at a Motorola PR klatch in Vienna in the mid '90s as we discussed maintaining the relevance of radio paging in the SMS era. The answer, of course, was flee for the hills. The invitation to fight to the last man in an epic stand against overwhelming odds with no possible gain in sight is one I will always respectfully decline.

Guess I'm not made of the stuff of heroes.

The mobile hasn't just done for the radio pager - it's done for the bedside clock, too. It's killing the iPod, iterative technological destruction at its best. The digital camera's not looking too pleased, the dictaphone is a relic and taxi companies aren't far behind. Telcos are being reduced to faceless providers of wholesale bandwidth - and they don't like it.

Who'd have thought you could do so much with a telephone, eh?

Apple Pay is the new toy from The Church Of Jobs. It's an NFC based payment system based on your Apple Store subscription that lets you pay for things by waggling your mobile at a terminal. It's causing some issues in the States right now where a group of retailers, including Wal-Mart and Gap, are prevented from accepting it because they've signed up to a rival NFC payment scheme that's not got off the ground yet. They're going to have to rip up that MoU fast if they're not going to alienate millions of iPhone-toting punters wanting to waggle their cash across.

And so the mobile is going to do for credit cards. We're not going to need that wee piece of plastic anymore. Which is interesting, because we arguably don't need what's behind it. We're paying 2.5% of every single transaction for the privilege of moving our money from our account to credit someone else. Sure, the retailer pays the 2.5%, not us. But if you think they're gladly absorbing that cost rather than passing it on faster than you can say antidisestablishmentarianism, you've got another thing coming.

Apple, Amazon et al can move money for nothing. And we trust them - we've already given them our credit cards. What if they tell us we can have what we want without having to use the card? Pay the 2.5%?

Banks will never allow it, surely?

Yeah, but wait until they realise they don't own the customer anymore. They're just virtual money stores at the backend of our more important direct relationship with the retailer. By inserting itself in the transaction, the mobile displaces the payment facilitator and renders it faceless. It's just a redundant transactional layer and technology removes redundant transactional layers rather neatly.

There's not a thing they can do about it. It's already game over.


Macthomson said...

Great article. I guess you follow Dave Birch on

Mohammed Owais said...

Perhaps I am missing something here. Apple Pay is simply a virtual layer over my credit cards so I don't have to whip them out of my wallet. The transaction still goes through the card and the subsequent 2.5% fee still applies.

When Apple start their own bank, it may be a different story.

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