iPhone 6: One Smartphone To Rule All Credit Cards

Ian Kar, Bank Innovation:

The first thing Apple has done is convince these four FIs to consider transactions from Apple’s upcoming payments venture — said to launch with its forthcoming iPhone 6 introduction — as “card present” transactions, which carry a lower discount rate than “card not present” transactions, because of lower fraud risk.

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Banks offered the discounted fee for two reasons: for the Apple payments platform to accept all of the cards from the issuers, and for Apple to assume some of the liability by including two secure elements that will authenticate transactions — location data via the NFC chip, and biometric security. This is essentially a wash for the financial services industry: they lowered fees for Apple for the privilege of being included in Apple’s payments initiative, but managed to put some of the transaction risk to Apple.

The financial institutions (FIs) are American Express, Bank of America, Capital One, Citigroup, and JP Morgan Chase. Only iPhones with NFC chips will be able to make payments, and that means none today.

Based on iPhone 6 leaks the overall industrial design does not seem to be anything special, but one major draw could be NFC. Does the thought of leaving all of your credit cards at home and needing only to take your iPhone out the door seem appealing? Yes? Then you’ll want to get the iPhone 6. (This is assuming all your credit cards are issued by the aforementioned financial institutions. Though I’m sure Apple is working on the rest.)