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How Apple Pay works and why it matters for developers

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Re: How Apple Pay works and why it matters for developers

#101

Post by gambiting »

exelius wrote: post #98

I'm curious how much, if anything, Apple makes off of this. It's pretty clear they're not displacing anyone in the existing merchant payment value chain (which is the mistake most other companies have made) but it's not clear how Apple makes any money off of this. I have a hunch that Apple might not be making any money at all off of Apple Pay. Apple operates their business very differently than many tech companies. T…

>>The vast majority of Apple's profit comes from the ridiculously high margins on their hardware.

I am not saying you are wrong, but could we see a source for that please? I always assumed that no matter what they do, the profit margin on hardware cannot be THAT large, because the costs of R&D and marketing for apple devices must be huge(they ship with their own in-house developed operating system,after all), so I always assumed that Apple makes most money off platforms like iTunes, not hardware profits. I would be very happy to be proven wrong though.

Re: How Apple Pay works and why it matters for developers

#102

Post by gambiting »

AYBABTME wrote: post #55
DrewAllyn wrote: post #44

Earlier quoted context omitted.

I'm a Canadian who is temporarily in the US, and it seems so backwards to me. A signature? You mean writing on a piece of paper that probably never gets looks at allows someone to take money out of my bank account? Chip+Pin at least has a semblance of technical security. And cash? Don't get me started. Cash can be physically lost. Cash can be stolen. When you pay with cash, you get given coins as well as the thing yo…

This, I'm living exactly the same situation right now. Last time I came to the US, I realized my cards' magnetic bands weren't working. Would have never noticed otherwise, chips don't wear off. Had to prepare for new cards before my next trip. Chips came so long ago in Canada that I can't recall when. My surprise every time I remember they're still not here. Then cash only places and having to receive coins; the wors…

>>Would have never noticed otherwise, chips don't wear off.

Oh that's so not true. I keep my cards in my pocket and I already had to replace a few due to the fact that they wouldn't be recognized at terminals anymore. And I am a huge supported of chip+pin.

Re: How Apple Pay works and why it matters for developers

#103

Post by sp332 »

eddieroger wrote: post #90
DrewAllyn wrote: post #44

Earlier quoted context omitted.

I'm a Canadian who is temporarily in the US, and it seems so backwards to me. A signature? You mean writing on a piece of paper that probably never gets looks at allows someone to take money out of my bank account? Chip+Pin at least has a semblance of technical security. And cash? Don't get me started. Cash can be physically lost. Cash can be stolen. When you pay with cash, you get given coins as well as the thing yo…

I used my swipe-only American Visa when I was in London, and was looked at like a neanderthal. Cards are easily stolen, signatures are easily forged, but my thumbprint is pretty much only mine (yes, it can be tricked, but you still have to get it somehow). I welcome two-form, and loathe Visa and MasterCard for holding it up as long they have in the States.

Someone hacked Target and Home Depot POS systems recently and stole millions of credit card numbers. I really don't want someone doing that to my thumbprint. I can always get a new CC# but I'm stuck with the thumbs I've got.

Re: How Apple Pay works and why it matters for developers

#104

Post by serve_yay »

VexXtreme wrote: post #54
dogecoinbase wrote: post #43

Earlier quoted context omitted.

Nothing, it's gibberish. Or, rather, a signal you can use to realize that the person who wrote it can't think critically and most likely doesn't have anything useful to say.

Or that they don't subscribe to everything The Cult of Apple feeds them. edit: getting downvoted like a champ. The Cult is strong with HN.

But I got down voted too, though.

It's a serious question -- what does this sort of talk actually mean? What would "subscribing to The Cult of Apple" mean in this situation? Using Apple Pay? Believing it will succeed? What?

Re: How Apple Pay works and why it matters for developers

#105

Post by Serow225 »

bostik wrote: post #71
AYBABTME wrote: post #55

Earlier quoted context omitted.

This, I'm living exactly the same situation right now. Last time I came to the US, I realized my cards' magnetic bands weren't working. Would have never noticed otherwise, chips don't wear off. Had to prepare for new cards before my next trip. Chips came so long ago in Canada that I can't recall when. My surprise every time I remember they're still not here. Then cash only places and having to receive coins; the wors…

> chips don't wear off The chips may not, but the contact surfaces corrode. Then, when you're facing a slightly aged payment terminal with also corroded contacts, your card gets rejected no matter what you do. So from my view, NFC in phone has two things going for it: it can be toggled on and off, effectively preventing drive-by cardjacking; and it is better protected from elements. The fact that I have other persona…

Pencil erasers do a great job to clean these type of contacts :)

Re: How Apple Pay works and why it matters for developers

#106

Post by eddieroger »

sp332 wrote: post #103
eddieroger wrote: post #90

Earlier quoted context omitted.

I used my swipe-only American Visa when I was in London, and was looked at like a neanderthal. Cards are easily stolen, signatures are easily forged, but my thumbprint is pretty much only mine (yes, it can be tricked, but you still have to get it somehow). I welcome two-form, and loathe Visa and MasterCard for holding it up as long they have in the States.

Someone hacked Target and Home Depot POS systems recently and stole millions of credit card numbers. I really don't want someone doing that to my thumbprint. I can always get a new CC# but I'm stuck with the thumbs I've got.

Is that meant to be a real reply? I'll answer it like it is, giving you the benefit of the doubt - your thumbprint is only used to unlock the data store on the device, where the credit card token is kept. Note token, not actual credit card number or CVV code. The data stolen from Target and Home Depot was the real number, where ApplePay will use a one-time token, so even if it's stolen, it's useless once the transaction is complete. But that wasn't a real reply, was it?

Re: How Apple Pay works and why it matters for developers

#107

Post by Oletros »

eddieroger wrote: post #91
21echoes wrote: post #26

> Apple Pay marks the first time a popular operating system is making payments a platform service for real-world, non-digital-good transactions, in a broad, inclusive manner that is compatible with the mainstream payments processing industry I'm sorry... what? How is this different from Google making Google Wallet back in 2011? They both use the same tech (PayPass, an industry standard), and both are made by an OS co…

> I'm sorry... what? How is this different from Google making Google Wallet back in 2011? Google only partnered with MasterCard, and only released in a limited number of handsets (they were all Nexus if I remember correctly). Apple partnered with Visa, MasterCard and AmEx ahead of time, as well as a dozen or so merchants, so that anyone who gets an iPhone 6 can actually use ApplePay nearly immediately without jumping…

They partnered with some more http://googlecommerce.blogspot.com.es/2012/08/use-any-credit...

Re: How Apple Pay works and why it matters for developers

#108

Post by sp332 »

eddieroger wrote: post #106
sp332 wrote: post #103

Earlier quoted context omitted.

Someone hacked Target and Home Depot POS systems recently and stole millions of credit card numbers. I really don't want someone doing that to my thumbprint. I can always get a new CC# but I'm stuck with the thumbs I've got.

Is that meant to be a real reply? I'll answer it like it is, giving you the benefit of the doubt - your thumbprint is only used to unlock the data store on the device, where the credit card token is kept. Note token, not actual credit card number or CVV code. The data stolen from Target and Home Depot was the real number, where ApplePay will use a one-time token, so even if it's stolen, it's useless once the transact…

Thanks, I had no idea why you were talking about thumbprints.

Re: How Apple Pay works and why it matters for developers

#109

Post by AYBABTME »

pyre wrote: post #88
AYBABTME wrote: post #55

Earlier quoted context omitted.

This, I'm living exactly the same situation right now. Last time I came to the US, I realized my cards' magnetic bands weren't working. Would have never noticed otherwise, chips don't wear off. Had to prepare for new cards before my next trip. Chips came so long ago in Canada that I can't recall when. My surprise every time I remember they're still not here. Then cash only places and having to receive coins; the wors…

> Chips came so long ago in Canada that I can't recall when. I left Canada in 2008, and I don't remember chip & pin being prevalent as it is now, so it's not quite as "long ago" as you are implying. But... you might have issues carrying just a credit card. Many places only accept debit due to there being smaller merchant fees and there are still many cash-only places (in Toronto at least). And seriously? When I end u…

Yeah the hyperbolism was on purpose. =P

Re: How Apple Pay works and why it matters for developers

#110

Post by exelius »

gambiting wrote: post #101
exelius wrote: post #98

I'm curious how much, if anything, Apple makes off of this. It's pretty clear they're not displacing anyone in the existing merchant payment value chain (which is the mistake most other companies have made) but it's not clear how Apple makes any money off of this. I have a hunch that Apple might not be making any money at all off of Apple Pay. Apple operates their business very differently than many tech companies. T…

>>The vast majority of Apple's profit comes from the ridiculously high margins on their hardware. I am not saying you are wrong, but could we see a source for that please? I always assumed that no matter what they do, the profit margin on hardware cannot be THAT large, because the costs of R&D and marketing for apple devices must be huge(they ship with their own in-house developed operating system,after all), so I al…

I don't have an explicit source; but we can back into the numbers. Apple only breaks out COGS for the entire company; not by division. But regardless, the iTunes division is dwarfed by the iPhone/iPad/Mac divisions. Apple's gross margins are right around 37.5% -- which is very high. The average for the computer/electronics industry is closer to 20%. If you look at historical trends through their past SEC filings, you'll see that margins have actually been declining, and that iTunes was only a significant percentage of revenue for the last couple of years. It was less than 1% of revenue before 2007, so it operated as a very small part of the company for the first 10 years of its existence. Online media direct sales are actually not as big of a business as you might think -- for example, Steam alone did more revenue than the entire online movie sales/rental business (not counting subscription services).

As a percentage of revenue, Apple's operating expenses (which include R&D and the operation of the Apple stores, servers, etc.) are pretty low -- less than 10%.

All of this info comes from Apple's 10-K: http://investor.apple.com/secfiling.cfm?filingID=1193125-13-...

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