MasterCard Exec: Apple Pay Launch Is ‘Catalytic’ Event (Oct. 21, 2014)
Apple Pay is a “catalytic” event likely to change the U.S. payments landscape, though it may take time to see its full effect, according to Matt Barr, MasterCard’s new U.S. head of emerging payments. Barr yesterday co-presented a keynote about Apple Pay with a top executive from card issuer USAA on the first day of SourceMedia’s PayThink conference in Phoenix.
In an interview with Paybefore, Barr said the publicity and consumer interest in Apple Pay—plus the participation of major banks—could be what ignites NFC in the U.S. Barr, who comes to his new post from MasterCard’s Australia operation, noted it took three or four years for NFC to drive a significant shift to contactless payments in the country. As far as the relatively low penetration of merchants in the U.S. that currently accept NFC payments—about 2 percent—that figure may be somewhat deceiving, Barr suggested. “It’s true Apple Pay currently works at only 220,000 U.S. merchant locations, but many of those are large merchants driving big volume,” he said. In Australia, for example, only about one-third of merchant locations are NFC-enabled, but half of all consumer card transactions are contactless, he explained.
Some of Apple Pay’s largest U.S. bank partners quietly began working with Apple about a year ago to integrate with the service, which launched yesterday, according to Neff Hudson, vice president of emerging channels at USAA. San Antonio, Texas-based USAA started working with Apple in early summer to integrate its credit and debit cards with the service, and the process is not yet complete, Hudson said. When USAA goes live with Apple Pay, Hudson expects to see strong customer adoption. Bank data already show about 10 percent of iPhone users are accessing USAA’s mobile banking app via the iPhone 6, he said. “A lot of people are buying this phone already, and I think it’s going to accelerate in the holiday season.” But Hudson cautions that consumer behavior is slow to change. “There will be a lot of interest, but it could be a long time before NFC reaches really broad status in the U.S.”
Apple Pay could be the nudge many merchants need to turn on NFC at existing payment terminals, Jennifer Miles, president of VeriFone Systems America, told attendees during another presentation. VeriFone has about 65 percent market share of U.S. payment terminals, and within the last year, 80 percent of the hardware the company has installed at merchant locations is NFC-ready, Miles said. “It may not be turned on, but [NFC] is there,” Miles noted. “You take the excitement around Apple Pay, and the fact that people know and trust Apple and are willing to use the phone and the wallet, and it feels like the perfect storm,” she said. “I think Apple Pay is going to drive a whole new environment at the POS.”
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