Authentication & Security

History of Apple in Mobile Payments, WIP for years, So much headway to just connect the dots

MEDICIFounder and Chief Strategy & Innovation Officer

On 9th Sep 2013, a day before its release, I wrote an article about Apple iPhone 5S - Would Apple become a Payment “POWER HOUSE” after tomorrow? 

As a blogger, I am tempted to write “little did I know….” But I must say I did know more than a little at that point of time having studied a lot about their patents in this area. That the biggest new-age payment system in the world, centered around mobility at the intersection of retail, banking and money was coming out of WIP (work in progress) -- Apple was connecting the dots. Next day Apple had announced the inclusion of Touch ID biometric fingerprint technology.

There are more than 100 Apple patents that can be related to the strikes Apple is making and will make in payments. And this article will throw light on some of them.

In 2007 —  iTunes with cards 

Apple applies for iTunes transaction patent. The patent described a cellular phone being able to make a secure connection to the iTunes Store "for the purposes of a device upgrade or commercial transaction." For example, it said, the computing device may be a portable media player, and the service may provide media to the computing device based on a capacity indication of the configuration indication.

In 2008 filed for an interestng patent 

September 9th, 2008 Apple began to file one of the first few patents addressing the slide to unlock technology with an early version of Touch ID

touch id

2009

“United States Trademark & Patent Office awards the company a major patent grant that covers the intricacies of the iWallet. This invention is supported by as much as 23 patent claims and dates back to the first quarter of 2009—indicating just how important it must have been to Apple” - ApplePatently.

2010 

Another set of Patent(s) applications filed in 2010 focused on "acquiring payment information on a handheld device."

"A method for conducting a group transaction having a plurality of group transaction members on a handheld electronic device."

"A method for authorizing a payment in a peer-to-peer transaction,"

"A method of conducting a wireless transaction,"

2011 

Apple filed another patent in Q2 2011. This was the Passbook patent!

And another - “Apple Patents Crowdsourced, Peer-To-Peer Mobile Banking That Could Use iTunes To Provide Cash On Demand” The patent was originally filed in July, 2011 and published by the USPTO in Jan 31, 2013

2012  (already ~300 million credit cards on file)

In March - The US Patent and Trademark Office revealed a patent that showed that Apple plans to launch a mobile payment service.

This year is important because Apple started brining some of the payments technology to life. It started experimenting with things in the outside world.

Easypay App:

Apple brought self checkout using Easypay app. What is Apple Store EasyPay app? You can take items off the shelf, scan them and walk out without ever speaking to the Apple Geniuses. Minimal payments friction and you don’t have to stand in a queue.

This year is also important because Apple started acquiring companies to connect the dots

In 2012, when Apple acquired AuthenTec the speculations of Apple introducing a fingerprint scanning option become clear. Things were silent for a while till late 2013.

Apple filed a patent application on Sep 2012 which got published on 16th January 2014 that reads METHOD TO SEND PAYMENT DATA THROUGH VARIOUS AIR INTERFACES WITHOUT COMPROMISING USER DATA. It talks about a commercial transaction(s) method using the concepts of NFC secure element as well as Bluetooth, wifi and others.

2013  (~500 million credit cards on file)

In the early days of Febuary 2013, Apple was silently installing and testing a new technology called iBeacons at a number of Major League Baseball Ballparks in the United States. Major League Baseball have been a very early adopter of Passbook and had already been working with Apple months before the release of Passbook. As Apple slowly deployed aspects of the iWallet, we saw how iBeacons etc. interact and inform many aspect of the transaction experience.

On July 19th, 2013 Apple acquired Locationary the largest collection of location experts in the world. It could have great implication on geo-fencing, iBeacons, iMaps, and location aware payments.

An iOS Table Reservation, Ordering And Payment System - On December 12th, 2013 while most of the US were focusing on holidays, the US patent office released a patent application filed by Apple. It appears to be just a small patent application but is actually a huge treasure trove of embodiments and presents a very detailed path Apple will take in retail payments. The patent application directly covers a unique system whereby a user of an iOS device could not only be presented with options of local restaurants but also the actual wait times and seating availability in real time. The patent goes on to explain remote and in restaurant ordering systems that allow customers and wait-staff to place and modify orders. Finally there is a payment option that would allow for pre or post payments of the order.

On Oct 23rd Apple keychain, a bold step that will go a long way to make purchases on the mobile phone in the very browser itself – safari. iCloud Keychain with its ability to store card details, points to the next stage of Apple creating a payments capability in its handsets. It was a huge small step forward. In many surveys it had been found that people don’t buy in the browsers on their smartphones because of the small screens and keypads. It doesn’t allow them to comfortably fill the personal and payment information on the phones. With Keychain that problem was solved. All the information (contact, credit card) that you saved in your safari on Macbook was now available on your iPhone and iPad and vice-versa. And with autofill it just entered the information on small screens, wherever and whenever its needed. bingo!

On December 6, Apple surprised everyone by starting the use of iBeacons solution across its 254 US retail stores. This is a fast paced development as per Apple standards which is known to take ample amount of time to test and perfect any new solution or feature.

TouchID: TouchID represents one of the significant building blocks in the direction of an end to end retail payments system. I cant emphasize enough how Apple’s iphone 5s touch ID is important for the security industry in general and payments in particular. In a few months it became very clear that this level of security could be extended to a wide number of uses including payments. How did Apple succeed in fingerprint technology where others have failed? Read this.

Apple Brings the Elements Together

Apple Payments

2014 and the future (~600 million cards on file)

Final validations for the thing(s) which have been in WIP for a long time.

Apple iBeacons got a shot in the arm with inMarket equipping 150+ Grocery Stores

Cook noted yesterday in earnings call that “customers have responded positively to being able to buy digital goods including music, movies and apps via Touch ID, and suggested that there’s potential for use of the fingerprint-scanning tech in other kinds of commerce, too.”

Apple’s CEO also said yesterday that Mobile Payments has “intrigued” the company for sometime now and that it actually figured in the company’s thinking around Touch ID. Calculated words passing through the external communication filters.

What he really meant was - we are going to fire on all cylinders very soon - online payments, in-store payments, transit, events, airports, and many other places such as restaurants.

Future Possibilites:

What will happen in terms of end user experience if all merchants using Passbook also start using iBeacons?

I tried analyzing the high-level impact of putting iBeacons at every merchant/company that has also implemented an app on passbook. Passbook app already allows users to access gift/loyalty cards for use at various retail and restaurant chain. Since all of these merchants are heavily bought into the Apple eco-system concept, it might not be too far fetched an idea to imagine these things happening.

iBeacons is based on Bluetooth technology, which implies that it will enable transactions with longer range: up-to 150 feet to be precise. And in the age of context, iBeacon promises to take the concept of Location Based Services to unprecedented heights. Let us try to understand its implications in some of the key sectors Aviation, Retail, Travel & Tourism, Event Industry, Cafes & Restaurants 

Apple has had a good run so far in getting payments just right. The user experience was perfected on the iTunes online store and was extended at the Apple retail store. What else I could think of? 

Apple enabled carrier billing (who else has the best shot at working with carriers)

Apple mobile card readers for small and micro merchants (The Trust)

Apple Device(s) based POS for bigger merchants (The scalability, acceptance and user experience)

Apple enabled global remittances (big one)

Apple Omni-Channel retail stores and Ecommerce payments, customer engagement, offers and discounts using iBeacons and other technology (where customer is at the center of the universe)

PS: With some help on research, sources and pics by LTP team from NYC, California, Bangalore and Charlotte.

Amit Goel

MEDICIFounder and Chief Strategy & Innovation Officer

“Amit Goel is the Founder & Chief Strategy & Innovation Officer for MEDICI. Amit’s vision is to build a strong FinTech market network that involves financial institutions, banks, startups, investors, analysts & other key stakeholders across the ecosystem – helping each one of them in a meaningful way by removing the asymmetry of information and providing a platform to engage & transact.\ \ Amit is passionate about bringing actionable FinTech-focused insights, innovative products & services for the FinTech ecosystem. Some of his work involves startup scores, bank scores/assessments, predictive viewpoints & other innovations that have helped MEDICI’s customers and the ecosystem. He has been named amongst the Top 100 FinTech thought leaders/influencers in the world & Top 10 in Asia multiple times by reputed agencies, consulting firms as well as financial institutions. Amit has built MEDICI (formerly LTP) as a new-age, tech-enabled advisory/research firm, which is now considered the #1 global research & innovation platform for FinTech in the world.\ \ Amit has been writing pioneering viewpoints on financial technology space that have been ahead of the curve since 2010. His data-driven predictions have helped the customers as well as the ecosystem. His past work experience includes a strong background in strategy & market analysis and advisory to clients (from big business houses to Fortune 500 firms) in payments, commerce, financial services & IT/technology. In the past, Amit had also founded a successful consulting & research practice called GrowthPraxis and has worked at Boston Analytics, Frost & Sullivan, and Daimler Chrysler in strategy & research.”