PayPal v.s. Apple pay team 32
For our technology of the week we compared the business models of PayPal and Apple pay. These particular companies have been chosen because they both provide innovative payment solutions that eliminate the need for physical payment cards. PayPal is an already worldwide known online transaction provider which is probably familiar for the majority of us. Apple pay is a recently released mobile payment provider, which is not yet available in the Netherlands but has high expectations to live up to on a global scale. Where PayPal has already established its position in both B2B and B2C market, Apple pay has to face a lot of competition on the mobile payment B2C market. Customers of payment services are considered to be reasonably loyal, which makes this market highly competitive. Additionally, technology upgrades of instore payment panels and mobile devices are required for Apple pay to be able to provide their service on a large scale.
Similarities of both companies can be found in their value proposition. Both aim to provide simple, flexible, low cost, convenient and secure payment possibilities. We are convinced that both solutions are simple and convenient but some aspects of both companies are not that clear. Since there is much theft and fraud in this industry, both PayPal and Apple pay need a strong security against this. A difference in privacy security is that PayPal stores all transaction information and Apple does not. Privacy is a hot subject of discussion and could be or become a reason why people prefer one service over the other. Additionally, these two companies have totally different revenue models. PayPal earns its revenue from transaction fees and the revenue of Apple pay consists of interchange fees. This is the strength of PayPal to obtain their position.
As both companies come from different backgrounds, they have the same goals. PayPal has launched an updated app for iOS and Android that expanded its mobile app capabilities by allowing users to search for local shops and restaurants that accept PayPal payments. Since they have the largest market share, they need to keep innovating themselves to stay ahead. One essential task which they can improve is the customer service that is currently lacking.
Apple is wide known and has a strong brand image. However, some of the few constraints Apple faces are the availability of price. Apple should make Apple pay available for all their devices if possible, but also lowering their hardware prices will trigger customers to buy their products. If Apple succeeds in this, they will become and sustain the largest market share in the smartphone industry. Finally, reassessing their revenue structure can enable Apple pay to enter different markets.
Roy de Beest | 376122
Shan Yee Chan | 436735
Hosni Sefiane | 433785
Romy de Vries | 361372
Cynthia Yuen | 354737
Earlier this week I read in the Dutch financial paper that the Netherlands now have 25 Steve Jobs schools. Curious as I am, I wanted to know what the fancy sounding Steve Jobs schools where. I found out that this are (unsurprisingly) elementary schools that extensively make use of iPads.
A Dutch man, Maurice de Hond, developed a business idea and software based on this concept and is trying to export it to other countries. The paper says Mr. de Hond claims it is a very profitable concept, but the article reads with a bit of a sarcastic undertone. Schools would pay hundreds of euros per student for software which would make the education of the children more individualized and evolved around the use of iPads by both children and teachers. A similar US concept is Altschool, which propagates the use of modern technology (not iPads particularly) in education as well.
I can see how children could gain from becoming more familiar and comfortable with using technology. The US National Educational Technology Standards give a good idea of knowledge and skills that children should be developing in their early years. On their website they say that maybe it is time to rethink education. New ways to educate children have to be developed to prepare them for a still unimaginable future. Education must not only adapt to technological changes but must be innovative. Innovating education goes far beyond just learning how to use new tools such as iPads. Incorporating modern attributes in the classroom should be a new look on how we teach, communicate, learn and work.
Such a foundational change is never easy to achieve. There have been teachers that enounced their concerns, as they fear children will miss out on key (social) experiences when technology infiltrate the schools (Murphy et. al., 2003). Basics can be forgotten, such as reading an actual book or having real life conversations. Thereby, the world wide web includes a lot of information that is inappropriate for a child’s eye. Having an iPad can make other materials seem redundant.
On the other hand, studies have provided compelling evidence that computer use can have a major positive impact on children’s social, emotional, language and cognitive development. The use of technology can reinforce critical skills, such as information gathering, evaluating, analyzing and presenting skills (Kenney, 2011). An example of using technology in education that makes the students obtain multiple skills may be that children look up the weather in different countries in different languages on their iPad. They can make use of the iPad to present their finding.
I’m an advocate of striving for the best and preparing your children to live in the grown up world and if technology is a well-integrated part of the daily teaching routine, it is beneficial for both student and teacher. Basics such as reading a book and human interactions should be maintained. Though, in my opinion, it should not specifically be based on a “special” software that is mainly just very expensive.
R.L. de Vries
Murphy, K., DePasquale, R., & E, M. (2003, November). Meaningful Connections, Using Technology in Primary Classrooms. Beyond the Journal, NAEYC.
Kenney, L. (2011). Elementary education, there’s an APP for that: Communication
technology in the elementary classroom. The Elon Journal of Undergraduate Research in
Communications, 2, 67-75.
In the USA it is already possible to pay with your mobile phone since in 2011, when the Google wallet was released, making use of the Near-Field Communication (NFC) chip in your mobile phone. Thereafter came Apple pay in 2014 and a few days ago, Android pay has been launched as the new and improved version from Google. Google wallet will now only handle peer-to-peer transactions and Android pay will work at the payment terminal. It is expected that the final grand player, Samsung, will come with their mobile payment system at the end of September for US users. Combining Google wallet and Andriod pay would’ve given google a unique differentiating position as Apple and Samsung pay will only facilitate payment terminal transactions. Why they didn’t opt for this integrated app remains unclear to me.
Nowadays, the Netherlands stand at the start of a mass-introduction of mobile payment. Even though all major providers in the US have the intention to provide their payment-apps in Europe, none of them wants to give information on when this will be. It is therefore expected that the largest banks in the Netherlands will take the lead in the Dutch market. Rabobank is currently operating on a small scale and ING is providing a trial version for a selected group and is expected to have an app up for business at the end of this year. ABN AMBRO will follow in 2016.
There are three reasons why Apple is not active in the Dutch market. The first has a practical nature, as Apple pay in the US functions with Mastercard, Visa, etc.. but is incompatible with Maestro which is the system from Mastercard whereupon European cards function. Secondly, Apple does not allow banks to install their payment applications on their specially developed chips. Lastly, it is the earnings model from Apple (and all other providers) which is unfavorable for European banks. It is a necessity for Apple to be a player on the mobile pay market in Europe to keep the sales of their products up.
The European banks have a difficult decision to make. They do not want to have their clients snatched off, but their mobile payment constructions can only be viable if they are based on a profitable business model. Suggestions that have been proposed to counter this ‘problem’ include; a monthly fee for the use of mobile payment, transaction costs for each mobile payment or an overall increase in the tariff of the underlying bank account. Honestly I don’t think (Dutch) customers are willing to pay for this innovation, at least at this point in time.
Recent surveys show that the interest in paying with your smartphone is already fairly disappointing. Apple pay is ruling as the market leader, but only 13% of iPhone compatible users have tried Apple pay at least once. The survey shows that some of the main reasons to not use this method of payment are unfamiliarity and security concerns. A global prognoses shows that at the end of 2015, 5% of the total of 600-650 million smartphones worldwide will be geared up with the required NFC chip and will be used at least one a month. I’m not overwhemeld by these numbers,
It is in the Netherlands still relatively new to pay contactless, let alone use mobile pay. The words of opposition that I hear are mostly safety related. Just leaving the costs and safety discussion in the middle, the adoption of mobile payment comes with an additional hurdle, that is privacy. In technology development privacy is always at discussion and I could see why people are apprehensive to give out all their consumer information. Will we trust Apple when they say they will not store the details of our transactions? If there is a way for both providers and retailers to give their customers some mental security, I believe that one day even the skeptical Dutchies will leave their wallets at home.
Author: R.L. de Vries
Student ID: 361372