In its monthly letter, Pantera Capital analyzed the merits of the recently launched Apple Pay versus those of Bitcoin. In short, Bitcoin wins. The silver lining for Apple Pay is that Bitcoin will make it better than it would have been if relying solely on the traditional financial system. Following are the key points:
– In general, Apple Pay has several drawbacks: It is only available for the latest iPhone, which will take time to reach customers. New point-of-sale (POS) systems being installed by retailers for next October may not accept it. Shoppers are unlikely to change their payment habits, especially in an environment where so many similar alternative payment options exist.
– EMV (EuroPay, MasterCard, Visa) technology involves a PIN-enabled chip to make credit card transactions more secure. While Apple Pay is capable of providing a similar level of security, some credit cards also allow for “Tap and Pay”, not requiring biometric validation.
– Bitcoin’s blockchain and Apple Pay’s tokenization make the two similar in securing and encrypting payments.
– Bitcoin has several advantages over Apple Pay: (1) It does not involve another intermediary (e.g. credit cards), and (2) It eliminates chargebacks.
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– Apple’s charging of 15 cents for every $100 to the consumer’s bank is considered negligible if it increases business volume.
– The only advantage Apple Pay has over Bitcoin: “Consumers forgo the friction of learning about an admittedly complex technology.” Together though, Apple Pay’s user interface will alleviate this problem.
– Bitcoin can work with Apple Pay due to: (1) Apple’s lifting of its ban on bitcoin transmission apps and (2) the flexibility of Apple Pay’s API to allow for bitcoin payment integration.
– Bitcoin will enhance Apple Pay by (1) avoiding the middlemen found with credit cards, (2) avoiding credit card fees, which would have been added to the Apple fees and (3) helping it reach a global audience beyond the US.
Previously speaking with DC Magnates, Glidera CEO David Ripley commented that Apple Pay is unlikely to produce savings in fees.