Apple has entered the payments race, and it’s brought the fastest car

Where in life we may want to have our cake and eat it too, in the personal technology business you want to be seen by Apple but left alone by Apple.

It’s bittersweet: if you use tech to make money from consumers and Apple doesn’t compete with you, you’re probably not doing anything that desperately needs doing, or you’re not improving on it all that much. That’s a hard reality for a lot of founders and CEOs in 2022, but it’s a reality with few exceptions. 

Apple has become the champion, and it remains so, because it only enters races everyone watches, and it only enters if it believes it will win. It’s the guy in the Bugatti at the lights disappointing the hopeful 20-year-old next to him in a Toyota. But pull up next to him in a Ferrari and you’ll see just how fast that Bugatti is. And, history shows us you’ll likely lose. 

Apple isn’t infallible. Occasionally it misses the light change. But it’s reliably successful. That’s how it became the world’s most valuable company. 

Apple has made two very different decisions in recent weeks. One to race and one not to.

It stepped back from the ‘metaverse’ hype that Facebook, desperate for a big bet to pay off, recently created and which set Twitter ablaze with prophecies of a world changing virtual reality, and, it stepped forward into the payments race. Apple doesn’t yet think the metaverse is a race worth entering, but it does think the payments space is. 

If you’re ‘in payments’ — any business that makes money by processing payments, like Stripe, Square (now Block), Zeller, or any of the 3000 other companies doing exactly the same thing but positioning as different in a pitch deck — you’d be pretty upset. You’d be upset because Apple has decided to turn its iPhone into a payments processing device and relegate your entire business to being just a small feature of their own. 

The days of walking into Officeworks and buying a Zeller or Square payment terminal to accept payments at your florist shop might be coming to an end. Because, as the banks discovered, no matter how hard you resist, when Apple adds competing and frictionless functionality to their devices, it’s a matter of when, not if, you lose market share to them. A best case scenario, like with ApplePay and the banks, is they will still let you play along, but charge you an absolute fortune for the privilege.

Apple has entered the race because Apple now has the global payments infrastructure and technology to deliver a payments platform for merchants through their iPhone that is cheaper and better than anything other companies can offer. If it wants to, Apple will become ubiquitous with consumers paying for anything from coffee to flowers — not just because consumers use ApplePay, but because merchants do too.

Perhaps with the only exception to this being that Google and Samsung will likely step up to compete, and give it a decent crack, too. The rest? Well, if Apple decides so, they’ll fall into obscurity, wither and die.

With this move by Apple, the payments companies have been validated; their pitch decks were right and the industry does need innovating. The only problem is that now the world champion has decided to enter the race and everything just became impossibly hard.

Remember, you want to be seen by Apple, but left alone by Apple.

Almost none of these standalone companies will stand a chance of competing with Apple. Don’t listen to their shareholder updates, their pitch decks or the reassurances they provide journalists at The Australian Financial Review. There’s no way out of this reality if it’s one Apple wants — and it seems to want it.

Apple’s technology capabilities, its financial resources, its borderless financial networks and the fact it already has 1 billion mobile payment machines, or iPhones, in-market makes the future pretty certain. If I was Spark Capital and I’d invested $50 million into Zeller in 2021, I’d be flipping the receipt over to see what the refund options were. Just as Apple did with ApplePay, it will push the banks aside in this space; the tiny fintechs don’t stand any more of a chance than that 20-year-old in his Toyota. 

I won’t call a failure just yet, but I wouldn’t want to be investing in a payments startup right now.