An article in today’s American Banker “Apple’s Mobile-Pay Vision Cuts Banks out of the Picture” sheds more light on why Visa acquired CyberSource. It was not just to fight off threats from PayPal and mobile carriers cutting significantly into Visa’s share of current and future ecommerce and mobile payments. It is also likely being done to acquire assets that will enable it to fend off future Apple payments efforts, that will surely cut into its lucrative payment stream.
As reported in the American Banker, Apples has filed several patent applications indicating a grand payments vision based on incorporating NFC chips into its iPhones. The patents describe in part a payment system linked to Apple’s proprietary iTunes service where users already buy music using a proprietary Apple payments system, albeit typically funded by the user’s credit card. Apple aggregates the 99 cent iTune payments before passing them on to the credit card networks in order to lower the interchange fees Apple has to pay the banks.
Surely an iPhone mobile payment system will similarly cut banks out of the loop – except where they are needed – i.e. to fund the user’s iTunes account. It appears from news reports that NFC-payments-enabled iPhones are not coming out at least for a year.
Visa’s acquisition of Cybersource will make it easier for Visa to compete with Apple, PayPal and mobile carriers’ foray into ecommerce and mobile payments. But it will still be VERY difficult for Visa and the banks to innovate as quickly and as deftly as Apple and PayPal have.
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