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One More Thing May/June 2019 www.isoandagent.com One more thing. Apple’s vision of the future of payments doesn’t include acquirers 001_ISO050619 1 4/25/19 1:03 PM 866.211.0738 | emsagent.com 866.211.0738 002_ISO050619_001 2 4/26/2019 8:18:49 AM Contents 08 Feature Story The Apple Card could be a compelling product for Apple devotees. But will merchants care if Apple doesn’t work with ISOs to promote acceptance? Credit Cards Technology Merchants 04 12 16 How Apple Card changes Blockchain has many fans, but who Discover prepares for its Apple Pay Cash is actually using it? small-biz comeback The Apple Card offers cash-back There’s much talk about the distribut- Discover is working to reclaim the turf rewards through Apple Pay Cash, and ed ledger tech originally designed for it lost in the small-business payments in doing so it changes the rules. bitcoin. But is there anything more? market. Credit Cards Retailers Technology 06 13 17 How Apple Card pressures banks TD overhauls its payments business Does the gig economy need its own and fintechs to aid retail stores T&E platform? The Apple Card would seem to take As more retailers close their physical Gig workers aren’t like full-time aim at other credit cards, but fintechs stores, TD is making changes to help employees — but they still have should also be worried. merchants cope. expenses. Retailers Technology M&A 11 14 18 Cash at Amazon Go: Could How Transport for London adds What’s next for FIS after its Amazon’s reversal be a boon? 53,000 contactless users a day $43 billion Worldpay deal? The cashless retail model will soon Consumers won’t adopt contactless FIS is planning smaller steps to disrupt take cash. Is this a good thing? payments without a good reason. the status quo. COVER ART FROM BLOOMBERG isoandagent.com May/June 2019 ISO&AGENT 1 001_ISO050619 1 4/25/2019 2:05:20 PM Editor’s View isoandagent.com 1 STATE STREET PLAZA, 27TH FLOOR NEW YORK, NY 10004 • (212) 803-8200 Why Apple Card EDITOR Daniel Wolfe 212-803-8397 [email protected] Matters CONTRIBUTING EDITOR David Heun It may be just “one more thing” Apple wants its fans to ART DIRECTOR Robin Henriquez buy. Or it may disrupt the entire credit card industry. GROUP EDITORIAL DIRECTOR, BANKING Richard Melville [email protected] The Apple Card’s card’s most compelling feature is SALES MANAGER, ADVERTISING not its spend-tracking software or its titanium design; Philip Redgate 212-803-8543 it’s the ease at which new cardholders can obtain it. [email protected] Gone are the days when banks could attract new EXECUTIVE DIRECTOR, CONTENT OPERATIONS AND CREATIVE SERVICES customers on college campuses by offering a candy Michael Chu bar as a sign-on bonus. To get to the top of the con- MARKETING MANAGER sumer’s wallet, issuers have to make their card as easy Deborah Vanderlinder to obtain as possible. CUSTOMER SERVICE 212-803-8500 And in the case of Apple Card, that means offering [email protected] it through an app that every iPhone owner will have on their phones. It’s the same marketing tactic that draws many iPhone owners to buy AirPods or to use iMessage, despite the abundant alternatives. That said, Apple Card’s success isn’t guaranteed. It is, first and foremost, a funding mechanism for a mobile wallet. Apple Card could be a catalyst for CHIEF EXECUTIVE OFFICER....................................Gemma Postlethwaite wider adoption of mobile payments, but Apple can’t do it alone. CHIEF FINANCIAL OFFICER ...........................................................Sean Kron That’s where ISOs and agents come in. If iPhone devotees are looking for a EVP & CHIEF CONTENT OFFICER ................................David Longobardi place to shop using their new Apple Card, it’s up to the acquiring industry to CHIEF STRATEGY OFFICER ........................................................Jeff Mancini make sure merchants are prepared to accept it. If the Apple Card truly is the CHIEF DATA OFFICER ............................................................ Christian Ward first card — or even the only card — in the wallets of this new generation of SVP, CONFERENCES & EVENTS .......................................... John DelMauro cardholders, merchants’ support of the payment method may be a deciding VP, PEOPLE & CULTURE ................................................................... Lee Gavin factor in whether they see any of that spending. ISO&Agent is published 6 times a year by SourceMedia, Inc., One State Street Plaza, 27th Floor New York, NY 10004. —Daniel Wolfe For customer service contact us at (212) 803-8500; email: [email protected]; or send correspondence to Customer Service, ISO&Agent, One State Street Plaza, 27th Floor New York NY 10004. Licensing and Reuse of Content: Contact our official partner, Wrights Media, about available usages, license and reprint fees, and award seal artwork at [email protected] or (877) 652-5295 for more information. Please note that Wright’s Media is the only authorized company that we’ve partnered with for SourceMedia materials. Those registered with the Copyright Clearance Center (222 Rosewood Drive, Danvers, Mass., 01923) have permission to photocopy articles. The fee is $10 per copy. Copying for other than personal use or internal reference is prohibited without express permission. This publication is designed to provide accurate and authoritative information regarding the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering financial, legal, accounting, tax, or other professional service. ISO&Agent is a trademark used herein under license. © 2019 ISO&Agent and SourceMedia, Inc. All rights reserved. 2 ISO&AGENT May/June 2019 002_ISO050619 2 4/25/2019 2:06:20 PM > YOUR CAPE IS HERE BE A MERCHANT SUPERHERO. Join the best cash discount program in the industry. SellPayLo.com | 888.981.9566 SignaPay is a registered ISO of Commercial Bank of California, Irvine, CA, Citizens Bank, Providence RI, Esquire Bank, Garden City, NY, Wells Fargo Bank, N.A., Concord CA, and the Canadian branch of U.S. Bank National Association and Elavon © Copyright 2006 - 2019, All Rights Reserved, SignaPay, LTD. 2006. 003_ISO050619 3 4/26/2019 8:18:53 AM CREDIT CARDS Rewards Richard Crone, a principal with Crone Consulting LLC. “Apple Card will be funding the Ap- ple Pay Cash balance with every pur- chase a customer makes, and Apple’s goal is to ignite active use by customers for shopping and P2P,” Crone said. Apple also notified customers that credit cards no longer may be used to fund P2P transfers using Apple Pay Cash. This rule blocks the possibility of leveraging the Mastercard-branded Apple Card for cash advances at ATMs, Apple said. The Apple Pay Cash fee is also meant to block fraudsters from spending funds received through Apple Pay Cash before they clear through the Mastercard-branded Apple Card, Crone speculates. “If you’re funding a payment with Apple Pay Cash and immediately go to Bloomberg News Bloomberg spend that money at a merchant, there could be a settlement risk with delayed How Apple Card alters funding, and fraudsters could try to arbitrage that time delay,” Crone said. Apple is hoping the Apple Card’s Apple Pay Cash combination of an elegant user-inter- The Apple Card offers cash-back rewards through Apple face and instant-access rewards will pull users into a cycle of regular card Pay Cash, but adds some strings to the process. usage with the novel feature of using rewards to fund P2P transfers. By Kate Fitzgerald “No other bank can offer instant rewards paid daily and the ability to Beyond Apple’s glitzy product rollouts, Pay’s ecosystem. The fee is small—no plow those rewards right back into P2P,” the tech giant quietly notified users of less than 0.25 percent to a maximum Crone said. new policies and a fee to Apple Pay of $10—but could be significant in dis- But not all consumers may be inter- Cash, the account in which the Apple couraging users from routinely draining ested in such offers, given the plethora Card deposits rewards. their Apple Pay Cash accounts. Users of available alternatives, said Brian For the first time Apple is charging a have an alternative to move Apple Pay Riley, director of credit advisory at Mer- 1 percent fee for Apple Pay Cash users Cash funds to their bank account via cator Advisory Group. to move funds instantly to a Visa debit ACH. “The promise of daily rewards sounds account, and it’s adding the guarantee The new debit card transfer fee wonderful, but for a typical user spend- that funds will be available no later aligns with other P2P services like Ven- ing $20,000 a year on the card with an than 30 minutes. The pricing—and time mo and PayPal, which charge a fee for average return of 2 percent on rewards, promise—is in line with the Visa Direct making sure funds arrive immediately, you have the potential of $1.09 per day debit-push service. but it’s a guardrail for recycling Apple in cash-back rewards—which doesn’t But the fee is also a point of friction Card rewards back into Apple Pay-pow- even buy you a cup of coffee,” Riley that didn’t previously exist in Apple ered P2P transfers and purchase, said said. ISO 4 ISO&AGENT May/June 2019 004_ISO050619 4 4/25/2019 2:07:07 PM TECHNOLOGY Mobile Payment Alipay, WeChat Pay, and the West By David Heun SnapPay has grown rapidly in its role nese tourists and residents. SnapPay much revenue.” as an acquirer and payments gateway cites research stating 32 million tourists In that regard, SnapPay spends a for Chinese mobile payment accep- traveled to North America in 2017 and lot of time and money on marketing tance in North America, and it is ready spent $132 billion U.S.
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