It's worth pointing articles like this whenever the Apple haters berate Apple's "greedy" 30% cut. Particularly when you only spend, say, $1-3 at a time, the fees take up most of that.
The only way you could have a more efficient system without cutting the credit card companies entirely (which is a huge proposition with enormous barrier to entry) is to buy prepaid credit in larger blocks (say $20 minimum) rather than charging each transaction (or day's transactions) in one small lump.
Apple partially has this with it's retail cards but they probably lose 20% of that to the retailer.
Payments seems to me to be one of those areas like music (and really all digital content) where there are players that have cooperate who basically have no interest in cooperating. In music and digital content it's the labels, publishers and studios, all of whom are investing heavily into turning the clock back to 1997 (thank you, 30 Rock). In payments, it's banks and other financial institutions (including credit card companies).
One player that has huge potential in this space in coming years are the mobile telecommunication providers. They have the network for POS system, mobile payments is an area growing in leaps and bounds and they have a payments infrastructure already.
Carriers seem intent on fighting progress too (as really does any large incumbent). Apple totally changed this industry with one product release [1], something the Apple haters seem to conveniently forget. If it wasn't for the iPhone, none of what we currently take for granted (even on other platforms) would be possible.
Carriers (and other distributors like cable companies) are terrified of becoming dumb data pipes for which the only differentiators are price and service area. But that is (IMHO) their inescapable fate. What carriers could be however is the infrastructure for mobile payments, which has enormous potential.
But currently they're ceding that market to Apple and Google.
EDIT: let me be clear, I'm not advocating Apple's position on mandatory use of their system. Far from it. I think the move is arrogant and short-sighted beyond belief. But criticisms of them being "greedy" predate that move by years. Personally I think Apple's payment infrastructure makes sense if you're small and not if you're large (much like hosting actually). As such it should be voluntary. Let it stand on it's own merits. I for one am going to be extremely pissed off if Kindle disappears from my iPad.
> It's worth pointing articles like this whenever the Apple haters berate Apple's "greedy" 30% cut. Particularly when you only spend, say, $1-3 at a time, the fees take up most of that.
I think the greedy part is more based on Apple's requirement that you use their system (and thus pay their 30% vig). If it was voluntary I don't think people would care too much about how big of a cut they took because you could always try and do better on your own.
At least for me, this is absolutely the case. I'm perfectly hapy to pay 30% to a payment processor for small-ticket items, and consider it a good deal.
But the problem comes in when I don't have a choice to run big-ticket items through Braintree, and there's no way for another company to provide a competing small-ticket gateway. In the long-run, that looks too much like a distributor model, which never worked out well for musicians.
Carriers have no advantage with regard to POS systems just because they own the network.
Carriers also have enormous regulatory problems. Currently most of them are regulated by the FCC, but when payments start showing up on phone bills the Federal Reserve and Treasury Department start getting curious. This leads to two dynamics that are bad for everyone: delay between each carrier and the government, and delay between each agency within the government as they fight out who gets to be in charge.
The only way you could have a more efficient system without cutting the credit card companies entirely (which is a huge proposition with enormous barrier to entry) is to buy prepaid credit in larger blocks (say $20 minimum) rather than charging each transaction (or day's transactions) in one small lump.
Apple partially has this with it's retail cards but they probably lose 20% of that to the retailer.
Payments seems to me to be one of those areas like music (and really all digital content) where there are players that have cooperate who basically have no interest in cooperating. In music and digital content it's the labels, publishers and studios, all of whom are investing heavily into turning the clock back to 1997 (thank you, 30 Rock). In payments, it's banks and other financial institutions (including credit card companies).
One player that has huge potential in this space in coming years are the mobile telecommunication providers. They have the network for POS system, mobile payments is an area growing in leaps and bounds and they have a payments infrastructure already.
Carriers seem intent on fighting progress too (as really does any large incumbent). Apple totally changed this industry with one product release [1], something the Apple haters seem to conveniently forget. If it wasn't for the iPhone, none of what we currently take for granted (even on other platforms) would be possible.
Carriers (and other distributors like cable companies) are terrified of becoming dumb data pipes for which the only differentiators are price and service area. But that is (IMHO) their inescapable fate. What carriers could be however is the infrastructure for mobile payments, which has enormous potential.
But currently they're ceding that market to Apple and Google.
EDIT: let me be clear, I'm not advocating Apple's position on mandatory use of their system. Far from it. I think the move is arrogant and short-sighted beyond belief. But criticisms of them being "greedy" predate that move by years. Personally I think Apple's payment infrastructure makes sense if you're small and not if you're large (much like hosting actually). As such it should be voluntary. Let it stand on it's own merits. I for one am going to be extremely pissed off if Kindle disappears from my iPad.
[1]: http://cdixon.org/2010/06/06/steve-jobs-single-handedly-rest...