Payments Blog • 4 MIN READ

The Second Mouse Gets the Cheese

John Dunne

Written by John Dunne

When it comes to being first to market, my favorite saying is, "Sometimes the second mouse gets the cheese." I think Samsung put an NFC chip in an Android phone around two years before Apple Pay launched. Even so, you've probably never seen as much publicity, buzz, or even that many people out there using it. If you're going to try to be first to market with an innovation, you've really got to think it through from end to end.

I'm an external observer of this market, but what I've seen is that Apple had a vision of making payments from the iPhone (and now the Apple Watch). They looked at what the user experience needed to be from end to end. They also looked at the shortcomings of the other products that were first to market. From there, they established relationships with the key players and built the whole end-to-end process in a way that could promote their product.

In reality, it's just making a payment. It doesn't matter whether you have an Android phone or an Apple phone. The key difference here is that Apple Pay differentiates through ease of use and security. They've tried to make sure that they add value not just to the consumer who can now make payments using their phone, but also to the payment processors themselves. They've made sure that once a card has been registered, the payments are being performed in an absolutely secure manner using tokenized numbers.

I have to disclose that I do have an iPhone and a Mac. However, it's important to do away with the common idea that Apple was first to market in many areas. Xerox invented the graphical user interface, which was then later adopted by the Apple Macintosh and Microsoft Windows. Apple certainly also didn't invent the first MP3 player, but they brought it to market in a way that consumers were able to embrace. Apple is very good at creating products that meet the needs of all their stakeholders and not just a few.

One of Apple's strengths is being very quick to market once they have decided on a vision. They're able to look at young startups or people that moved into a market and figure out some of the issues that the stakeholders might have overlooked. They investigate how to take on a particular ecosystem and make it work for everyone.

In terms of Apple Pay, this is demonstrated by robust security. From a consumer perspective, I can remotely wipe my phone and my fingerprint is required to make a purchase. From an institution perspective, the numbers are per-transaction tokenized. If they happen to be intercepted, they are no good other than for that single transaction. Everybody involved feels as if transactions using Apple Pay are being performed with more security.

As a consumer, I still have to either pull out my phone or my wallet. However, when I'm walking to the store to pick up milk in the morning, I can now make the choice to just take my phone and not worry about having to find my wallet, cash, or my credit card. There's an element of convenience, but I think that's the minor factor. The major factor to me is the ability to make purchases with tap & go regardless of whether the card you've been issued has that capability or not.

In five years from now, I think it's only inevitable that people will want to be able to transfer money to each other as easily as they can today with retailers and merchants. As an example, our office softball team is warming up for summer and everybody's got to kick in $25. That means that fifteen people have to find an ATM and withdraw the money. Then, they have to give it to somebody else who then has to deposit it into their bank. Wouldn't it be much easier if we could all just walk up and tap our phones to his? Suddenly those $25 would just appear in his account.

Without a doubt, I think the concept of physical cards will eventually fade away. You'll instead have an account identity that will be linked to devices like the Apple Watch. These wearable devices are even more convenient than having to pull your phone out. You'll just tap your wrist on the device (and hopefully not scratch its face in the process).

Topics: Payments

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