List: How will the iPhone 8 handle payments?
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Apple HomePods
Pay by Face
At least one iPhone model is rumored to have almost no bezels surrounding the screen — and thus, no room for the company's Touch ID fingerprint reader on the front of the phone.

Apple could just move the reader to the side or the back, but the next iPhone is also expected to have a facial recognition system codenamed Pearl ID.

Digging through code Apple accidentally published for its planned HomePod devices, developer Guilherme Rambo concluded that the iPhone "definitely supports [Pearl ID] for payments," supports multiple faces, and can be used as part of a multi-factor biometric authentication system that would also support Touch ID.

Third-party apps would also be able to access Pearl ID for facial recognition, Rambo says.
iphone 7 plus
iMessage vs Apple Pay
Rather than hide P-to-P in the Wallet app or any other part of Apple Pay, Apple is building its P-to-P offering around its Messages app in its planned iOS 11 update.

“It’s super simple because it’s integrated right into Messages … you securely authenticate with TouchID and if you receive money with iMessage, it goes into your Apple Pay cash card," said Craig Federighi, Apple's senior vice president of software engineering, in a presentation at Apple's annual Worldwide Developers Conference (WWDC) in June.

The Messages app also integrates P-to-P as an autofill suggestion when typing. If a friend mentions needing an amount of money, the Messages app can suggest sending those funds via Apple Pay from within the chat.
Apple’s move into the P-to-P payments landscape is somewhat late to the game and faces stiff competition.

PayPal's Venmo is often cited as the biggest threat, but Apple's system also resembles what Facebook is doing with its Messenger product under the leadership of former PayPal boss David Marcus.
Apple pay sticker
Apple Pay Cash card
Apple’s announcement of its upcoming launch of P-to-P capabilities was no surprise. But the details should come as a shock to many of the banks that have bent over backwards to support Apple Pay on Apple's strict terms.

The P-to-P function can draw funds from Apple Pay, but it doesn't require that the recipient be enrolled in Apple's mobile wallet. The funds can instead go onto a virtual Apple Pay Cash card (a prepaid account from Green Dot), a structure that may have significant implications for issuers both domestically and internationally if Apple chooses to expand the capability.

While Apple Pay is the most commonly used mobile wallet at the point of sale, it's little to brag about. Recent research from First Annapolis highlights that just 8% of iPhone owners are regular (once per week or more) users of Apple Pay in store, so clearly its practice of working only with banks has its limits.

The Apple Pay Cash card is purely virtual, according to a source from Apple, and thus it cuts out the need to enroll with a bank account or even carry a separate wallet.

A P-to-P system tucked within iMessage may seem like little threat to banks, but there is precedent for P-to-P as a gateway drug to retail transactions. AliPay and WeChat wallets have exploded, reaching US$2.9 trillion in 2016. Both of these payment networks evolved from messaging platforms.

"The real challenge will be getting consumers to use the P-to-P service," said Michael Moeser, director of payments at Javelin. "When Apple Pay first came out it had very little competition, despite Google’s efforts. In contrast, Apple’s new P-to-P service will compete head-on with Venmo, Zelle, Square and others. Giving the enhanced functionality of a virtual debit card may not be enough to fuel widespread adoption."

The success or failure of Apple’s P-to-P effort may be the deciding factor in determining whether Apple's devotees want to keep their money in an account tied only to their iPhones.
iPhone 7 comparison shopper
The "blue bar"
Apple's plans to display a bright blue bar on iPhone screens when an application is monitoring the user's location may feel like a threat to location-based marketing. More likely, it is an overdue wake-up call for retailers and banks to improve their communication about the benefits of location data.

The premise behind Apple's location data change in iOS 11 is to help users differentiate legitimate businesses using location data to send valuable messages and offers, from those with less noble intentions. Background activity such as location detection can also be a battery drain, so it benefits Apple to give users more control over how their iPhones consume power.

Banks and retailers increasingly use location data to send location-based offers or to alert customers when they're near a store that accepts mobile payments. Under Apple's plan, the implication is that consumers will want to turn off those apps to guard their privacy and make their phones more efficient.

But that blue bar could turn out to be less of a warning signal and more of a call to action.

The change could benefit app developers and merchants that rely on location monitoring, said Asif R. Khan, founder and president of the Location Based Marketing Association, whose members' livelihoods rely on effective multi-channel messaging through connected devices.

"If this development comes in the next Apple release, it is a step in the right direction for the industry," Khan said. "There is a lot of value in location, but the onus is on the developer to articulate that."
Apple Watches Series 2
Is NFC opening up?
One WWDC blink-and-you’ll-miss-it announcement related to the upcoming watchOS4 enabling NFC connectivity to gym equipment for synchronization of workout details. While hardly a radical new feature for iOS users, this marks a somewhat larger shift in attitude from Apple on NFC, which Apple has considered so proprietary that it doesn't even provide an NFC on/off switch in the iPhone's settings.

NFC has been around as an ISO standard since 2003 as an enabler of short range RFID connectivity between devices and readable tags. While it has found a home with the former through the support of Apple and Android’s mobile payments, the latter has effectively fallen by the wayside, particularly in the world of marketing and advertising where it is hard to compete with the cost and commonality of QR codes.

At first glance, it would appear that Apple’s new, less restrictive attitude to NFC could be a godsend to companies developing mobile wallets, but it makes sense to be highly cautious relating to Apple’s support of NFC, or indeed any third party standard.

Like the widely recognized Bluetooth and WiFi logos, the NFC Forum developed the ‘N-Mark’ logo as a means of showing compatibility and standardization between NFC enabled technology. Unfortunately, uptake and support of this mark has been far from universal, with payment networks and mobile wallets typically eschewing conformity for their own brand of "Pay."

If NFC backers thought that Apple’s WWDC announcement amounted to tacit endorsement of NFC over other interface standards, this was shot down shortly thereafter by the announcement that Apple would provide native support for QR Code scanning. This was not a full blown endorsement of QR codes either since the scanning functionality can only be used for scanning codes into Apple’s passbook. Nonetheless, Apple made it clear that it will continue to support a directly competing standard to NFC, albeit on its own terms.
iPhone 6 Plus camera user
Poised for global growth
Apple Pay will make its debut in Denmark, Finland, Sweden and the United Arab Emirates before the end of the year, the company revealed during its third-quarter earnings call.

The expansion follows Apple's move into Ireland and Taiwan during the previous quarter. With these additions, the company's mobile wallet will be available in 19 markets.

In the same manner as before, Apple executives praised Apple Pay's growth but did not reveal specific numbers for adoption or transactions.

But chief financial officer Luca Maestri did say Apple Pay was in the forefront of Near Field Communication contactless payments, revealing the mobile wallet "is by far the No. 1 NFC payment service on mobile devices, with nearly 90% of transactions globally."

Apple Pay, Android Pay and Samsung Pay each support NFC, and Samsung also has a system for simulating a card swipe on non-NFC terminals. Other mobile wallets on Android handsets typically use Host Card Emulation for contactless payments without access to the secure element.

“Momentum is strongest in international markets, where the infrastructure for mobile payments has developed faster than in the U.S.," Maestri added.

Three out of four Apple Pay transactions happen outside the U.S., and with the launch of iOS 11 this fall, consumers in the U.S. will be able to "make and receive person-to-person payments quickly, easily, and securely,” Maestri said. At its June developer conference, Apple revealed it would use iMessage to power its P-to-P payments through Apple Pay with the iOS 11 launch.
Apple demonstrates augmented reality
The camera in control
Apple is talking big about augmented reality in iOS 11, with some interesting new features already built in. For example, the simple Apple Notes app can now scan any document and let users mark it up or add their signature through the touchscreen.

The use of the camera has been an integral part of payments as long as smartphones have existed — one of the earliest and arguably most useful features of mobile banking has been remote deposit capture (RDC), enabled in the U.S. in the wake of Check 21 Act passing in 2003. The law allowed images of checks to be treated as equal to a physical check, and even though people could scan checks from computers early on, it was the addition of this technology to mobile that made it take off as a consumer service.

The craze over mobile RDC was driving unconventional decisions, such as when banks chose to put out standalone RDC apps to get the service running faster than they could by integrating RDC with their existing mobile banking apps.

Smartphone cameras are also heavily relied upon for scanning QR codes, or reading embossed credit card numbers to input into a mobile wallet or shopping app. More recently, Mastercard began using the smartphone's camera for "Selfie Pay" authentication in e-commerce.

Even in light of these advances, Apple seems best placed to leverage the commercial capabilities of the camera inside and outside the home given the breadth of its ecosystem.

Apple's AR capabilities will allow for real-time information overlays on the world around us, presumably with sponsored calls to action from retailers and brands. And facial recognition can provide not just a robust form of authentication of the user in card present and card not present environments, but the ability for the merchant to know more about the habits and preferences of their customers prior to the point of purchase, bringing KYC to another level.