Smartpay : Apple Pay to utilise existing contactless technology

He says that Smartpay already has Apple Certification for its hand held eftpos terminals so expects the existing contactless enable terminals to work.

'Whether a customer chooses to pay with a contactless card such as a Visa Paywave / Mastercard Paypass card or by touching their new iPhone or iWatch is really no different as both methods rely on the NFC capabilities built into our terminals to accept the transaction.'

But Bradley Gerdis says the move could have a big impact on banks as the traditionally players in this space.

He says most New Zealand banks currently issue credit and debit cards such as Visa and Mastercard to their customers. They also provide an acquiring facility through the EFTPOS terminal provided by either their bank or an independent provider such as Smartpay which allows them to accept these cards for payments. The acquiring bank connects the transaction from the cardholders bank account through the terminal and settles the funds back to the merchants bank account. Banks typically get paid for both sides of the transaction by the cards schemes such as Visa or Mastercard for issuing the card to the cardholder, and by the merchant for providing them acceptance of card.

'Apple's recent move seems to be aimed at the issuing side of the transaction. While Apple is holding its cards close to its chest at the moment, the logical outcome of their approach is to become an issuer of cards, or more specifically card numbers, which would transfer the issuing fees currently earned by the issuing banks to Apple. This would effectively reduce a big part of existing bank revenues in this space.

'They could do this without having to issue physical plastic cards as all that matters from a payments system point of view is the account / card number which is simply a unique identifier that while traditionally issued on a plastic card could just as easily be issued to a virtual wallet such as Apple Pay.'

Bradley Gerdis says all of this can leverage the existing networks already in place in New Zealand and across the world.

'While its early days with Apple's new payments system only touted for release in the USA at the moment, it will be interesting to see the impact on existing issuers as a preview to what may be to come for New Zealand banks.'