Apple Pay Is No Revolutionary Change, Says NACS

November 4, 2014
NACS Online
Wall Street Journal op-ed explains why widely heralded payment innovation still too dependent on the credit card companies.
​WASHINGTON – In an opinion piece in today’s Wall Street Journal, NACS Senior Vice President of Government Affairs Lyle Beckwith shared his thoughts on mobile payments — and on Apple Pay, in particular.
Below is an excerpt from the opinion piece, in which Beckwith writes:
No company can compete with Apple when it comes to releasing new products, and last month the tech giant brought some attention and excitement to how we pay for things with the introduction of Apple Pay. That’s a good thing, as the payments system is an often-overlooked but crucial part of the economy and how it functions.
But Apple fell short of revolutionary change—because it built its product on the flawed credit-card payment system. Apple Pay works by linking existing credit- or debit-card accounts to mobile phones. Those accounts use an antiquated system dominated by two giants— Visa and MasterCard —that set “swipe fees” that merchants must pay every time a customer pays with a card.
Credit and debit cards are undercutting the purpose of payments by making them expensive. Cash is cheaper than electronic payments because of the inflated, price-fixed fees the card companies foist on merchants. Electronic payments ought to be cheaper than cash, though they won’t be if they are built entirely on the system that’s propping up Visa and MasterCard. There is room for mobile payments to be the cheapest, most secure and most innovative payment technology on the market.
This will require real change. A mobile-payments system could link directly to an individual’s checking account, or transactions could be completed over the Internet, for example. A payments system could even connect directly to a mobile-phone bill. But mobile-payments providers need to be willing to jettison the baggage of price-fixed payment cards. That would be a real revolution in the payments system.
Read Beckwith’s full op-ed on the Wall Street Journal site. Read more about the work that NACS is doing in the field of mobile payments.