In July 2020, Apple acquired Canadian start-up, Mobeewave, for $100 million as per reports from Bloomberg. Mobeewave uses award-winning, patented technology to let merchants accept card payments with just a tap on the customer’s iPhone.
Customers with Mobeewave’s app installed on their iPhone can also accept cashless payments. According to Crunchbase, Mobeewave offers ‘a true wallet experience for consumers...enabling in-person consumer-to-consumer transactions, between strangers as well as friends and family, in a secure, trusted and open environment’.
Apple CEO Tim Cook told CNBC that his company frequently acquires small start-ups to integrate their technology into existing Apple IP. The Mobeewave acquisition made headlines, however, because of its significant ramifications for the payment industry and incumbent financial institutions.
In 2014, Apple introduced a digital wallet “Apple Pay” and five years later it launched the Apple Card (backed by Goldman Sachs). The company is now uniquely positioned to lead the digital revolution with its acquisition of Mobeewave.
Apple has a huge advantage over other tech companies in terms of its global popularity, enormous marketing budget and existing foothold in the mobile payment industry. Its integration of Mobeewave’s technology into its extensive network of iPhones is a viable threat to existing companies such as Square that offer cashless payment solutions, as well as incumbent financial institutions and peer-to-peer payment (P2P) services including Venmo and PayPal.
This acquisition also points to the ever-growing potential of fintech companies in the digital era. Fintech firms like Mobeewave provide financial services through technology, from banking to mobile apps to cryptocurrency. In the same way as Airbnb disrupted the hospitality industry, fintech firms have the potential to disrupt the financial industry.
As Mobeewave stated on its LinkedIn page, ‘We’re digitising the last sector where cash is still king: the world of in-person, peer-to-peer, and micro-merchant transactions’.
Mobeewave’s technology allows shoppers to tap their credit card or smartphone against another smartphone to process a payment. This is a momentous advance for customers and signifies a turning point for the payment processing industry.
Apple’s acquisition of Mobeewave will accelerate the world of contactless payments. Mobeewave operates with an app and just one piece of hardware, a near field communications (NFC) chip, which have been included in iPhones since 2014. Apple now possesses the technology to turn iPhones into mobile payment terminals.
While it poses a threat to competitors in the financial industry, Apple’s acquisition of Mobeewave couldn’t have come at a better time for consumers. The COVID-19 pandemic expedited an already burgeoning trend toward a cashless economy. - cash withdrawals from ATMs plunged in the US during the early weeks of the pandemic as many people were fearful of touching paper money potentially contaminated with virus particles. Even the World Health Organisation recommended businesses move to cashless transactions to eliminate the spread of the coronavirus.
It’s not uncommon to encounter restaurants and shops that only accept credit cards these days, and Mobeewave’s technology would make shopping even less risky if society adapts to using iPhones as cash wallets and payment terminals.
The way we shop is constantly changing as businesses attempt to keep up with ever-evolving technology. In the last half century changes in consumer transactions have advanced exponentially.
Not so long ago, cash transactions were used for most purchases. When cheques became a viable option for large purchases, people began carrying less cash. Next came credit and debit cards. With just one swipe, our wallets got lighter, but our purchasing power became enormous. Credit cards remained popular for years, partially due to credit card companies incentivising purchases with cash-back points or airline miles.
In the last few years, customers have had even more payment options at their disposal, including mobile payment services such as Venmo, and mobile wallets, which can be used on a smartphone by scanning a QR code to pay for goods or services.
Currently, merchants use electronic point-of-sale (ePOS) terminals to accept major credit cards. With the ubiquity of smartphones and fintech P2P apps like Venmo, PayPal, Google Pay, Apple Pay Cash, and Square Cash App, bricks-and-mortar retailers and e-commerce merchants default to using mobile POS systems, giving customers more choice in the way they pay.
Mobile POS (mPOS)systems are cloud-based, while electronic POS systems store customer information electronically. Both require external hardware - mPOS terminals have the advantage of being mobile devices, while ePOS terminals are closer in technology to a traditional cash register.
The SoftPOS revolution enables contactless payments of any amount via a smartphone or tablet, in the same way a traditional payment terminal functions but with no additional equipment.
The evolution of cashless payment from cards towards ubiquitous mobile money is well underway. By equipping a mobile phone with secure, contactless payment acceptance capability, making and receiving payments becomes safer for everybody involved in the transaction.
The PCI Security Standards Council data security standard enables merchants to accept contactless payments using a smartphone or other commercial off-the-shelf mobile device with near-field communication. This move is clearly anticipating widespread adoption of the technology.
Banks and payment service providers (PSPs) are in a race to onboard more merchants and offer a wider range of payment solutions. It would be prudent for banks to leverage these new ways of paying; embracing new payment methods to ensure their existing infrastructure can seamlessly offer choice to consumers and businesses.
Traditional banks simply compete with the fintech payment sector in terms of capital and consumer trust. Rather than try and fight big tech, major banks should collaborate with fintech companies. Incumbent financial institutions can reap the benefits of fintech innovations if they are willing to adapt.
PSPs on the other hand are entirely focused on serving segments of merchants. SoftPOS is now available as a white label solution that can be launched in a matter of days.
Everyone wants a share of the multi-billion dollar point-of-sale terminal industry, which has massive implications for customers, merchants, and society. POS terminals could effectively become extinct in just a few years if all goes well with big tech’s foray into cashless payments and tap to phone. Who the winners will be? Only time will tell with trail blazers leading the change. What is certain is that banks and PSPs need to play their cards now as the pandemic accelerates technology innovation and adoption.