What does Apple’s acquisition of Mobeewave mean for banks?
The acquisition of Mobeewave by Apple, a Canada-based startup that enables merchants to use their smartphone as a payment terminal by simply tapping the card, could have dire consequences, according to Christoffer O. Hernæs, chief technical officer at Norwegian online bank Sbanken Banks have.
Write on his personal Blog, paints a number of revenue-reducing scenarios for banks and credit card companies should Apple gain momentum with its recent acquisition in the payments space.
As consumers and merchants steer clear of cash in favor of contactless payments and touchless interfaces, “the option to authenticate a payment on your own phone rather than using a potentially germinal PIN pad can be the spark that speeds up mobile payments,” he says.
If Apple were to take on a role as the primary customer interface for payments and push banks out of the picture, it could potentially be able to charge banks as the default payment option if third-party wallets gain dominance, he suggests
The banks’ considerable income from interchange fees could also be won.
“If Apple can find widespread acceptance by both consumers and retailers, they could theoretically bypass traditional payment systems and banking infrastructure and process their own payments,” says Hernæs. “This will not only affect system providers such as Visa / Mastercard, but also banks, which receive part of their transaction income from interchange fees every time a card payment is processed.”
According to the European Central Bank, the total interchange fees paid by acquirers to issuers for consumer card transactions within the EU amounted to around EUR 7,800 million, even after the IFR market capitalization, where interchange fees decreased by EUR 2,700 million in the pool of revenue for interchange fees is still important.
Hernæs explains: “An interesting result of the study is that issuers have lost revenues of 2,950 million euros per year. Acquirers, on the other hand, achieved income of 1,200 million euros due to lower interchange fees. Unsurprisingly, this is the part of the value chain that Apple is aiming for with its newly acquired POS capabilities. “
Much has been said about the threat of the Mobeewave buyout to companies like Square and iZettle, which sell card readers to merchants to process contactless payments. Hernæs points out that Square’s real value lies in its unique positioning amidst its customers’ income streams and the revenue-generating opportunities that come from offering small business loans through Square Cash.
Square recently received federal and state regulatory approval to open a bank in Utah, which means it will soon be able to provide commercial loans to merchants who process card transactions through its payment system.
Hernæs explains, “It remains to be seen how far Apple will go into this area, but a look at how Square is redefining everyday banking services through its ecosystem, combined with the ability to bypass existing infrastructure by closing the loop in payment processing and the position is strengthened. “as a mobile wallet provider shows the potential effects on the established providers.”