Structuring the FinTech Disruption: Apple vs. MCX < Apple + MCX

For anyone following the general disruption happening of the electronic payments space, or the Apple Pay / MCX war in particular, this exchange is an interesting data point.  There are two takeaways I see from this.

The first is that "it's on".  The siege by new players / models on the electronic payments ecosystem is starting to impact the conversation, if not the bottom line (yet).  Apple Pay and other technologies are beginning to pierce the fees framework that has long filled the coffers of the existing electronic payments system.  Today the more successful emergents operate as a friend to the existing players (but that will change).

The second takeaway is that the existing players do not yet fully grasp the siege underway.  The war is not Apple vs. MCX; it's Apple + MCX vs the status quo.  In this discussion, Apple Pay is being blocked by retailers because it is "too friendly" to the existing system, perpetuating the existing fee structure rather than attacking it.  MCX and it's parter retailers understand that the existing fees structure is outright robbery given today's technology, and they are taking a stand.

The Apple Pay / MCX battle is one between two armies on the same side, each with different strategies and assets.  Apple doesn't win by taking a portion of the existing fee structure, and neither does MCX.  They and the other disruptors win by decimating the economics of the current system.  Apple is building an army of users before striking.  MCX already enjoys its army of retailers and sees Apple as a threat to this asset.

Battles will be lost, but the war will be won.  This salvo may not strike the death blow, but more attempts are coming.  The existing electronic payments system is bloated with technology that has been displaced with significantly cheaper, more secure options.  Significant value that the current system enjoys will be returned to the consumer (through lower prices), retailers will retain some as will new players within the system (e.g. Apple).  The days of merchants paying 2 - 4% per transaction are numbered.