Apple Pay: What To Do, Not Do

apple pay logo

By Ray Birch

SAN CARLOS, Calif.—Simply signing a contract for Apple Pay is not a mobile payments strategy, cautions one payments consultant who encourages CUs to carefully map their payments future and learn from the past.

Concerned that many financial institutions have rushed to sign with Apple Pay given the tight deadline to enroll, Richard Crone, principal of Crone Consulting LLC, sees Apple’s solution as a bridge to where the bank or credit union needs to be with mobile payments.

“You need a vision for your mobile payments future,” offered Crone, saying Apple Pay—which launches today—plays a short-term role.

CUs have no choice but to enroll their BINs with the new payment method, insisted Crone. “If the credit union chooses not to enroll, it risks being perceived by members as not responsive to the marketplace.”


Richard Crone, Crone Consulting

Learn From The Past

Crone likened the need to enroll now with Apple Pay to FIs signing on with new online financial management tools offered by Quicken, Intuit and AOL in the 1990s, only to drop the services in the next year when they developed their own online banking initiatives.

“Those services, too, were a bridge,” he said.

“I lived through this scenario when I was the SVP and director of online banking at Home Savings of America,” explained Crone. “At the time, I convinced our board of directors to spend $1.5 million to be in the initial launch of online banking inside Intuit’s Quicken and Microsoft Money. I met my first-year projections in the first three months of the launch.”

That helped educate consumers, build awareness of online financial management tools, and HSA’s initial base of online-savvy customers. 

“However, within a year we were able to connect directly with customers through our own branded Internet banking site,” said Crone. “Needless to say, we were able to abandon our financial commitment to Intuit and Microsoft and save millions of dollars.”  

Credit unions will save, insists Crone, by exiting Apple Pay once they have their own branded wallet solutions, recommending FIs that have not determined their mobile wallet strategies form plans that will preserve the institution’s branding as well as interchange revenue. He pointed out CUs will pay Apple 15 BPs on credit and a half-cent per transaction on debit, in addition to ongoing interchange costs, while also providing the tier-one member service.

Crone also fears Apple will give enrolled FIs very little branding capability. “Make no mistake, the branding here is Apple Pay.”

Crone insisted that was much of the problem with the early online banking tools: FIs lost control of the enrollment process, valuable data and the direct relationship with their customers.

Customers could only access their financial institution through the technology company’s platform, which disenfranchised other customers, he said. Banks and credit unions gave up revenue spreads, and subordinated both their brands and the user experiences they considered key to differentiating themselves among each other.

“(With mobile payments) the one who enrolls is the one who controls—is the system of record for payment credentials, the token, the user interface, the authentication . . . The one who enrolls controls the value creation and the covenant of trust with the cardholder,” said Crone.

Work To Offer CU Branded Wallet

Just as CUs may have rushed to offer Apple Pay to members, Crone said they should not lose time and work quickly to offer a digital wallet solution that allows for strong credit union branding.

“Apple gave issuers roughly five business days to make a decision as to whether they would participate in the rollout,” said Crone. “That forced many credit unions to make decisions that do not follow NCUA of FFIEC guidelines regarding due diligence in contract negotiations.”

Crone said he expects thousands of FIs to enroll initially, and thanked Apple for giving mobile payments a much-needed boost. “That was very gracious on their part.”

But he cautioned CUs to not lose sight of what happened in the ’90s. “As they say, if you don’t study history you are doomed to repeat it.”

Section: Standard
Word Count: 855
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Copyright Year: 2019
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