The recent launch of Apple Pay created lots of media splash. When you examine the details, however, it's a little murky as to just how much, if any, banks will benefit from offering this to their customers. As far as marketing ROI for financial institutions, whether Apple Pay lives up to the hype remains to be seen.
A couple of considerations are:
Banks sacrificed breathing room. Banks that are Apple Pay launch partners are not able to integrate their credentials from their own mobile banking into Apple Pay. The option was not available because Apple wants to control the payment experience. This ties banks to Apple tighter than with any other wallet player. The inability to offer an integrated payment experience could become a liability, as no bank wants their customer to open up a different app or another wallet to pay their bills. This could hurt marketing ROI for financial institutions.
Banks risk their branding efforts being outshone by Apple's. Even large banks with national footprints are at risk of being eclipsed. Branding is integral to the success of banking, so it will be challenging to really be viewed as a true Apple partner.
What other choices are out there for financial institutions?
Since partner banks will not be able to enable payments outside of Apple Pay, banks may approach Android technology. Android supports a host card emulation, which would offer a payment experience that is more flexible for banks.
Financial institutions will most likely also begin scrambling to tap into ways to benefit from Apple's other offerings, such as targeting Apple's affluent customers with promotions to open credit cards. The revenue these customers would provide could offset the fees the banks will be paying for Apple Pay.
Apple Pay offers some exciting progress in the world of bill pay, but they are asking a great deal from their bank partners. While sure to be a game changer, it remains to be seen if Apple Pay and banks will live happily ever after.
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