Apple Pay is coming. What's coming? A new point of entry device and associated technology focused at the user level to make money payments for things they buy. A new "front end" to consumer payments.
Evolutionary but actually revolutionary. The only difference between the two concepts of change being the time frame over which the change takes place as well as the means of enabling change.
The old school front end was cash. Coins and dollar bills. Paper Checks. Then came credit cards. Apple Pay replaces the plastic card with a device, iPhone6, but beyond the point of sale it interfaces with the established back end credit card processing system.
What is the back end credit card processing system?
Wikipedia describes credit cards at this link. Informative and interesting. But in the broadest terms what are they, what do they do? Cash is an immediate payment. Bank checks require a Clearing House to process the checks and shift money from the account of the payer to the payee. The accounts may be in the same bank or a different bank. Read the prior link description about how the clearing process was done in the Bank of New York in 1853. Amusing to visualize but it got the job done.
The Automated Clearing House is how the clearing process is done today. From the link: "In 2012, this network processed an estimated 21 billion ACH transactions with a total value of $36.9 trillion.[1] Credit card payments are handled by separate networks."
This link provides a good explanation of that "Separate Network":
"Credit Card Processing Clearinghouse
When you have chosen a bank or a broker you will find that they
usually "contract out" processing the credit card processing /
transactions to a clearinghouse. When you submit a charge the
Transaction Processing Clearinghouse is the organization that authorizes
and validates the card (making sure the number matches the card and
that sufficient funds are available)."
Banks contract out the clearing house function for credit cards. There are only two big credit card players: Visa and Master Card, each initially associated with a Big Bank but now identified by its own brand and corporate structure since they were spun off by their associated Big Bank to perform "contracted out" clearing house functions.
Apple Pay will be a front end device and software for traditional credit card clearing functions.
The traditional credit card clearing functions offer bells and whistles to their credit/debit card services. Points programs, fraud protection, etc. They are a revolving credit system, unless payment is otherwise immediate depending on the type of card.
Credit card companies are the "man in the middle" between users and their banks.
Eliminating the credit card clearing middle man would be a revolution. How easy, costly would it be to make that revolution?
Give users, both payers and payees a trusted choice and let them decide how they wish to use a medium of exchange. A choice as easy as telephone number portability to a different service provider. It all depends on what services are desired.
Might Apple Pay be the foot in the door for a conversion from a debt money system to a debt free money system?
The revolution depends on when Apple becomes a Financial Services Provider and is subject to associated rules and regulations. The technical details of this status are presented and discussed at this Naked Capitalism link. Anything that Yves "strongly suggests" being read is serious stuff!
If Apple were to tread into areas of CFPB areas of examination and enforcement authority as a financial services provider then perhaps this is a "contract out" to a new entity to perform these services like banks contracted out to credit card clearing houses to perform financial services. The "contracted out" services would be offered "in association with the Apple front end device" just like the App store offers services to owners of the Apple Device? Except in this case there would be only one financial services provider to take the place of a credit card clearing house.
Possible? What if a choice of using debt free money vs. credit debt money was offered?
That sets up a whole new world of monetary system design possibilities.
Keep in mind that it was Elizabeth Warren that was initially in charge of the formation of the CFPB. The banks strongly resisted it. Anything the banks resist, I like.
Might the CFPB front run interference from the banks that might otherwise prohibit Apple from associating with a newly created financial services provider for which the Apple device becomes the point of system entry to a debt free money system?
A digital money payment system that would eliminate middle man clearing house functions as well as banks? Do it with debt free money? Is that possible?
Digital revolutions can happen quickly!
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