From a news perspective, this week has been quiet in FinTech and blockchain, however, earlier this week there was an announcement that turned heads from the smallest crypto teams right through to the largest multi-national banking corporations in the world.
I am of course talking about Apple announcing the Apple card.
According to NFC World, Apple Pay processed 1.8 billion transactions in Q4 in 2018. The Service is also available at 74 of the top 100 US retailers – Apple Card simply enables Apple to provide financial services to its users where Apple Pay is not accepted, demonstrating Apple’s intent for life after the iPhone.
Those watching Fintech have been waiting on Apple and other platform providers to step into the Payments arena with real intent for some time, and Apple has taken the first mover advantage in this move.
The Card has all the trappings you would expect from Apple – beautiful design and colours that demonstrate the status of the holder. Partnering with Goldman Sachs and Mastercard as the issuing bank and global payments network partners, Apple is working with the most established names in the industry.
At this point, you may be asking what this has to do with Crypto, and a lot of people probably missed the correlation, but this is absolutely huge for digital assets and micropayments in particular.
Rewards programs in finance are not new, however, Apple has engineered a product that creates money from nothing. When you buy something on your Apple Cash Card, you get a percentage of your purchase back in daily cash deposited to your Apple Pay Cash Card, instantaneously.
This means that Apple has created two products in one – Apple Card, and the new Apple Cash Card with an income stream from Apple Card.
So – Apple in effect is creating new money, that has no cost to Apple.
With all rewards cards, the cost of the rewards is paid by the merchant you spend your money with. These fees are generally 2%, and it is from these funds that the Daily Cash accrues for the card user. Whenever Apple card is used to buy an Apple product or used with special partner merchants – they do not need to pay this 2% fee
Are you still with me?
This means the following:
When Apple Card is used paying any merchant, Apple gain revenue on the transaction, and when an Apple Card Cash user pays Apple, they do not incur any merchant fee, because they are the merchant and the card issuer.
So, consider a song purchased for 99c from apple. This would generally incur a 13c payment processing fee. There are about 2 million apps in the app store, and in 2017 Apple sold 217 million iPhones. These are extremely conservative numbers, but if these people made 5 app store purchases monthly, that is a new revenue stream of £1.7b annually.
This is where Crypto comes in.
Crypto is the harbinger of the new digital economy, in which we can make nano-payments for goods and services – want a news item? A blog post? Tip a tweet? A song? By moving to a digital currency that enables payments on less than 1c with no transaction fees, Apple will facilitate the new commerce model of the internet, rather than the advertising model.
Samsung Pay has already announced their partnership with Crypto wallets, enabling those transactions, however, it is the merchants that need to facilitate this paradigm shift in payments, and Apple has blasted this door wide open.
The window of understanding has been opened – instead of cash rewards in your Apple cash wallet, any crypto team that operates in this paradigm of rewarding the consumer and merchant by removing payment fee’s will see user adoption – as long as those rewards are given back to the users in the form of spendable currency.
I don’t have an understanding of how Bitcoin is thought of within Apple, however, it is conceivable that a Bitcoin wallet could become part of Apple Pay, which would enable nano and micro-transactions.
It’s a very exciting time to be part of the payments industry, 2019 continues to be a year of big developments. We will try to keep you informed.
Nakameowdough has only known about Crypto since late 2017. As soon as he heard about it from a trusted source, he spent the next 14 months with his head buried in books on the subject or listening to a multitude of podcasts.
This dedicated self-development allowed him to pivot from a career in I.T. towards FinTech and he now works with one of the most exciting companies in London, the FinTech hub of the world.
His position within that company affords him the benefit of working with highly innovative businesses and facing the challenges of integrating exciting solutions, with old systems.You can reach Nakameowdough on Twitter
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