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Apple Pay Will Make You Pay

By Frugaling 8 Comments

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iPhone and Macbook for Apple Pay
Photo: William Iven/Unsplash

Apple’s agenda should scare you

Last week, Apple held their 2016 Worldwide Developer Conference (WWDC). Like always, it was a smorgasbord of updates to operating systems and apps, developer fandom, and hooplah over Siri’s special powers (now she’ll work across devices!).

Cue the applause.

However, I had this weird problem when I went to stream the keynote. You see, Google Chrome was blocked from being able to watch the event. The website told me I needed to be in the Safari browser on a Mac or iOS device (i.e., iPhone or iPad).

I thought nothing of it at the time; except, “Well, this is inconvenient.” But really, why should I care? I simply switched to Safari and then streamed every remaining second of it. My mind spit out whatever I was doing beforehand in favor of all things Apple. I was jacked in.

But in that moment — that blip of inconvenience due to Apple’s desire to withhold information from any Android or PC user, something distasteful festered. My head kept picking at it like a stubborn cuticle. It felt uncomfortable to be forced to switch. Why should I need to? There’s something arrogant about it. Apple was a pioneer in technology; surely, they knew how to present the keynote address across multiple browsers, right? The intentionality felt hostile — a confrontation to openness in the Internet Age.

The cost of being a user

Many people have talked about Apple as a “walled garden.” What they’re implying is that the company is protective of their devices, operating system functions, and who can play in the iOS world. For developers and consumers, the effects have pros and cons. Apple’s devices are more secure, but they’re also more expensive.

You’ve got to pay up to belong, but membership has its… privileges. The devices are beautiful and the operating system is solid. But paying up – in more ways than one — is quickly becoming Apple’s specialty. For starters, their devices have some of the largest margins in the industry. As most of the hardware industry has dwindled, Apple’s pushed on to become one of the largest companies in the world.

Now, their financial acumen goes beyond the machines they manufacture. About two years ago, the company made moves into the financial industry with Apple Pay. It used to be limited to restaurants, groceries, gas stations, and other retailers that accept plastic credit cards. Those retailers employed Near-Field Communication (NFC) devices that could then accept iPhones and Watches via Apple Pay. Users could rid their wallet of the extra plastic in the process. How easy!

You’ll pay for updates to Apple Pay

This year’s WWDC contained a little nod to Apple Pay in the form of a button that could be placed on websites that accept credit transactions. They dubbed it, “Apple Pay on the Web.” This new button would take the place of filling out forms and spending countless hours of your life punching in 16-digit numbers, expiration dates, CVV codes, full names, addresses, phone numbers, your blood type, your cousin’s maiden name, and your favorite fruit.

Apple’s making a value proposition. Essentially, they’re saying, “We know you value your time. That’s why we’ve created an ingenious solution that’ll solve the hassle and time it takes to shop online.”

Behind this “solution” is a masterclass in consumption. First, Apple Pay will only work with Macs; at least, to start. You’ll need a Mac running Safari. As always, Apple’s computers have a large profit margin built in. That means you’re paying a hefty amount over comparable systems just to pay for things online (are we noticing a consumption loop here?).

Second, Apple is pairing Apple Pay on the Web with iPhones. That phone is going to cost you, as well. Heck, a new iPhone costs about $700 off contract. The phone will be used to “confirm” transactions — press your thumb (or any other digit of your choosing) to your TouchID sensor. Et voila! You’ve purchased… something.

Third, all this “innovation” is to help you consume, to pay more, to think less, to spend more time mashing your thumb against a sensor. It’s made for businesses more than consumers. And while it’s awesome to have autofill forms, instant transactions, and secure payments, shouldn’t we weigh the potential costs of this so-called progress?

Reduced friction = increased spend

The convenience of online retailers contains a risk for some spenders: reduced friction. Friction occurs when you rub your hands together — feel that heat? Friction is the reason I’m burning so much gas in my car, too. Just read the company’s description about Apple Pay:

Customers love the simplicity of Apple Pay, and you’ll love the increased conversion rates and new user adoption that come with it.

Apple Pay for the Web will reduce time spent critically making important decisions that directly affect your wallet. Will you spend or save today? Even more, the method continues to encourage the Apple-everything mindset in the face of lofty price points. They’ve created a system to reduce friction for a small subset of the population — those that can pay up to have at least two Apple-branded products at all times.

Today, I see a modality that shouldn’t be encouraged. For Apple, by Apple. They’re creating a world where nobody else can play; unless, you’re an Apple owner, then you’ll pay.

Filed Under: Save Money Tagged With: Apple, apple pay, internet, iPhone, Macbook, NFC, Online, reduced friction, Shopping, TouchID, Walled Garden, web

Why Google Wallet Needed To Release An Offline Debit Card

By Frugaling 4 Comments

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Google Wallet Card Balance Phone DebitLast week, I wrote an article bringing attention to the Google Wallet Card. This decision to print and give away a free debit card will usher in a new epoch of payments, banking, and budgeting. But when I finished writing the story, I realized there was a missing piece to all of the current press: Why did Google release an offline debit card in the first place?

Google Wallet was announced in 2011, and released as a smartphone app in September of that year. After over two years of development and company expenditures, critics suggest the experiment has failed:

…Google Wallet is a dud, at least to date, despite the company’s expenditure of an estimated $300 million in real money on its development… (USAToday)

Earlier this year, rumors began swirling that Google would be releasing a physical debit card to be paired with its Wallet service. Unfortunately, ahead of the company’s major press event, Google I/O, they scrapped the release and went back to the drawing board. Despite being considered a “dud” by some analysts, Google Wallet was already beginning to catch on – largely credited to the payment processing of Android apps and Google Play purchases.

Google is already sucking in that purchase data on many fronts — between Google Play payments, Google Checkout on the Web and also advertiser payments — in addition to the dedicated Google Wallet project. (AllThingsD)

Google Wallet Debit Card Swipe Image

On November 20, 2013, Google decided to follow through with the release of a physical debit card (issued with a Mastercard logo). Commentators and speculators suggest that the Google Wallet platform needed to increase users’ payment options. As much of what we buy in stores takes a physical swipe of a card, these stories suggest that the debit card would help pay for physical goods. But tech writers have questioned Google’s decision to enter the physical world:

It’s surprising because Google exists to get people off physical media and into virtual digital everything. They’ve also been a leading force in mobile payments with both Android and Google Wallet. (ComputerWorld)

The persistence of plastic suggests we’re a lot farther than we think from a world where true mobile payments are the norm. (Washington Post)

Thus far, the primary hypothesis seems to center on the idea that Google has admitted to the failure of its online-only payment platform – it’s kowtowing to the payment processing gods and issuing a physical card. These articles and writers don’t give enough credit to this decision or Google’s business acumen. The company is in the payment processing business for the long haul. Much like their advertising platform, which is considered to be the best ad system in the world, payments give vital details about user habits, transactions, and life outside Google. There’s money in that big data and Google is about to start drilling.

With the release of a debit card, Google Wallet is not admitting defeat nor is it suggesting we have a “lot” further to go before mobile payments become the norm. Rather, the Wallet platform is injecting itself into the current psychological modality for purchasing goods for evolution down the road. Users of the product will begin to natively track and spend via the online platform. This will likely cause people to start defaulting to this payment system.

Meanwhile, Google has laid a diverse framework and future for the payment system by interlinking it with Gmail, Google+, and a growing number of online services. Now, you can send money via Gmail, swipe for gas, and receive a payment – instantly and securely. But Google needed a card to segue purchasers to this mobile platform. Eventually, when people are convinced that the online, digital model works better than physical, debit card swipes, Google will win.

Every recent service Google has announced has required a segue from the search model. From Drive to Plus to Wallet, these services have been built-in to a diverse set of products. Drive is now caked into Gmail attachments. Plus is a necessity for YouTube comments. And now, Wallet… Necessary for Google Play purchases and about to grow into another multi-billion dollar industry for Google. Making a physical card was just another segue for Google to make users’ switch to a mobile payment model more seamless.

An era of mobile payments is nearly here. In the next 4 to 5 years, we’ll likely see a massive switch to digital payments. Just like the banking industry today, there will be multiple players and competition. The major difference will be that tech behemoths will compete directly with big banks. What’s clear is that the players that can create a natural blend of on and offline payments now will win later.

Filed Under: Best Credit Cards, Save Money Tagged With: Banking, Bitcoin, Card, Debit, Gmail, Google, Google Wallet, money, NFC, PayPal, Plus, Youtube

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