This Month in Payments News: September 2014

Each month we round up the most interesting news in payments, the stories that have the potential to change the industry in ways big and small.


In our series here on the Resource Center, each month, we round up the biggest stories in the payments industry -- the breaking news and developing trends that stand to change this space and herald innovation. In this edition, we’re covering mid-August to the end of September. Follow along!

August and September were big months for the payments industry, with many of the tech giants announcing new products, partnerships and splits. Here they are:


Apple Finally Announces its Payment Solution

As expected, Apple announced on September 9th, that its new iPhone 6 and 6 Plus devices will be equipped with NFC technology. They also announced a platform called Apple Pay that will leverage the technology to enable shoppers to make purchases seamlessly with their phones in-store and via mobile applications. It also makes it easy to pay for items via mobile devices using TouchID. With this move, Apple is smartly relying on existing technology (in the form of NFC and credit card systems). They also worked with the top banks and card issuers, including Visa, Mastercard and Bank of America, to ensure broad acceptance. To make the economics work, Apple negotiated so that retailers will be charged the same rate as when customers pay with a card in-person, rather than the higher “card not present” rate. Apple Pay will launch with a rich set of features and integrations, but we’re most excited to see how it will evolve. In particular, we see a huge opportunity in the world of loyalty and offers. At the end of the day, paying with your phone is little more than a parlor trick. The lasting value lies in what a phone-based transaction can bring to consumers via personalized service and a tailored experience.


PayPal Ups the Ante, Sets Up to Split from eBay

eBay, PayPal’s parent company, bought Braintree last year, promising innovation to come. We’re starting to see the fruits of their labor now. PayPal recently introduced One Touch mobile payments powered by Braintree and Venmo. One Touch is geared toward mobile shoppers, enabling them to simplify the payments process on their smartphones and tablets. Interestingly, this announcement came before Apple Pay (don’t worry, we’re getting to that). Of course, this kind of payments simplification has been a long time coming for mobile experiences. One Touch is an outgrowth of a similar feature in Venmo (also powered by Braintree.)

If all this overlap is getting confusing, well ... It’s about to get really interesting, as eBay’s board has made the somewhat surprising decision to spin PayPal off into its own company once more. Billionaire activist investor Carl Icahn was originally laughed at for suggesting this back in February, but now everyone seems to be on the same page (and investors are clearly happy about the move.)


Where Would Square Be Without Starbucks?

Square has always had a significant leg up in the competitive payments space by virtue of its outspoken CEO, Jack Dorsey, co-founder of Twitter. But Square’s Starbucks partnership was actually one of its most interesting moves to date. Some people thought it was genius -- getting them in front of millions of customers they wouldn’t otherwise be able to reach and boosting their reputation to merchants in the process. Others pointed to rumors that Square has lost $25 million on the deal as proof that the deal was ill-fated (and ill-conceived). Square’s investors claim this is all part of their master plan, but whether that plan is well-thought-out is yet to be seen. (The defensive blog post they put up in August certainly doesn’t bode well.) The waters got even muddier as it became clear that Square’s Wallet product bumped up against the Starbucks app -- a competitor, at least in their storefronts. Square eventually killed their wallet. Will they kill the Starbucks deal too? We’ll probably find out within next year, as their partnership is up for review.



Bottom of the News

Here are a few other articles about payments that are worth a read:

The Credit Card's Second Act. (New York Times)

One in 4 Shoppers Considers e-Payments More Secure than Cards or Cash (

Venmo Has Overtaken Starbucks (Cayan Insights)

The Future of Mobile Commerce is Commerce (GigaOm)