The Apple Pay versus bitcoin debate
This story originally appeared in The Green Sheet Issue 150101 on January 12, 2015.
A key metric for measuring the success of emerging payment solutions has always been its rate of merchant adoption. Generally, this metric is indicative of consumer demand for the product as well. In the case of bitcoin, merchants and consumers alike have been slowly warming to the innovative crypto-currency, but the product has not yet earned high favor among mainstream processors or the merchant majorities they serve.
Bitcoin has made some headway into the merchant market by way of integrating with POS software. For example, NCR Corp.'s POS solutions provider NCR Silver experienced a flurry of merchant activity immediately upon adding bitcoin to its supported product set. Comparing this activity to the company's previous additions of Apple Inc.'s Apple Pay and PayPal Inc. payments, Reggie Kimble, Product Manager at NCR Silver, stated, "I would say this [product] has probably been the most well received in terms of people commenting and people reaching out proactively to ask questions about the offering."
One crypto-currency enthusiast The Green Sheet contacted went so far as a claim this statement could foster the belief that merchants now prefer bitcoin over Apple Pay; professionals in the payments industry express more moderate views.
"We've had some inquiries about both [products]," said Daniel Kornitzer, Chief Product Officer at Optimal Payments Plc, when asked about the merchant activity surrounding his company's recently disclosed plans to support an Apple Pay software development kit for in-app payment transactions. "In Apple Pay's case, many of the merchant inquiries were around our October announcement, whereas for bitcoin, it's been more of a steady trickle."
Kornitzer also noted how exciting and intriguing the bitcoin product is for the market, and said his company is "looking at it favorably, even though we haven't announced plans to support it."
As far as whether he expects a higher level of merchant interest in bitcoin, Kornitzer said, "Apple carries a certain amount of weight, and they've cleverly elected to preserve the role of payments in the payments value-chain by inserting themselves into the chain, versus trying to change it."
Apple Pay well positioned
Despite device platform limitations that inhibit Apple Pay's ubiquity, Kornitzer believes Apple Pay is positioned to easily exceed the small market share bitcoin has been steadily gaining.
While Apple predicted it would have 25 million subscribers on the Apple Pay platform by the end of 2014, bitcoin made strides through lower profile, yet equally as capable avenues. BitPay, a bitcoin payment processor, demonstrated the new Bitcoin Checkout product at the 2014 Money20/20 conference in Las Vegas. The near field communication-based tool, designed to assist merchants using Android devices with acceptance of bitcoin, was reportedly well received at the event.
In addition, major online retailers such as Overstock and Blockchain set an early bar for promoting bitcoin as a form of payment, and PayPal recently added the alternative currency to its platform for merchants to accept. Does this mean bitcoin could be in the running to outpace, or even match stride with Apple Pay?
Comfort an issue
Jared Isaacman, Chief Executive Officer at Harbortouch, doesn't think so. In October 2014, his company launched Perkwave, an Apple Pay-enabled mobile application that effectively sidesteps the EMV (Europay, MasterCard and Visa) process by using Apple's mobile wallet solution to conduct pay-at-the-table transactions. "We received thousands of emails and calls from merchants who were afraid they would lose business from customers if they didn't have Apple Pay," he said.
According to Isaacman, Apple made it easy for both merchants and consumers alike by "choosing to ride the rails of the existing payments industry." He believes Apple took the approach of making a better experience for the mobile user, and this has already created high merchant demand for the product.
Isaacman also noted that bitcoin is still contending with the questionable reputation it gained early on when the currency was used to handle anonymous, underground purchases. Calling it a "guilty-by-association" standing, he summed up his reason for choosing Apple Pay over bitcoin in one succinct statement: "If I can't convince my mother to use her iPhone to pay a bill, I sure won't convince her to use a crypto-currency."