Beyond Apple Pay: Massive Savings for Banks with Verestro's NFC for iOS

The European Union's requirement for Apple to open up its NFC module on iPhones has paved the way for a revolutionary solution that stands to save banks millions annually. Verestro has seized this opportunity, developing and deploying an SDK that offers a compelling alternative to Apple Pay, directly benefiting financial institutions across Europe.

Table of Contents:

1. Apple NFC Access - New Era of Contactless Payments

2. The Apple Pay Cost Burden

3. What Is a Cost-Effective Alternative to Apple Pay on iPhones?

4. How Does the Verestro iOS NFC Solution Work?

5. NFC on iOS: Key Benefits for Banks

6. Differences Compared to Android and Apple Pay

7. Who Should Be Interested?

Apple NFC Access - New Era of Contactless Payments

Mobile wallets are becoming the preferred method for millions worldwide. For years, banks and other wallet issuers faced a significant hurdle on iOS devices: contactless NFC payments were largely restricted to Apple Pay, limiting their ability to offer branded tap-to-pay solutions and nurture direct customer relationships. This scenario often led to increased brand dilution and additional third-party transaction fees for banks.

However, a pivotal shift occurred when Apple updated iOS to allow third-party access to its Near Field Communication (NFC) functionality. This opening has created a new playing field for banks and wallet issuers, and Verestro has swiftly seized this opportunity, developing a contactless payment solution that offers a compelling and cost-effective alternative to Apple Pay for financial institutions across Europe.

The Apple Pay Cost Burden

One of the most pressing issues for banks has been the substantial costs associated with Apple Pay transactions. Banks currently incur a 0.05% commission for every card transaction made via Apple Pay, in addition to quarterly fees for each card added to Apple Pay wallets (approximately 4 PLN per card in Poland). These charges accumulate rapidly, leading to significant annual expenses. For instance, in Poland alone, the estimated annual cost for the top 10 to 15 banks due to Apple's commission ranges from approximately 19.4 to 32.3 million PLN. Across Europe, these aggregate savings for banks could potentially amount to billions of Euros.

What Is a Cost-Effective Alternative to Apple Pay on iPhones? 

Verestro's NFC solution for iOS offers a crucial difference: banks do not have to bear any of Apple's significant costs, which can reach several to tens of millions of Euros annually. From a customer perspective, Verestro's solution seamlessly replaces the Apple Wallet, activated by the side button, with the bank's native wallet. Payments can also be initiated by activating the bank's application on the phone.

How Does the Verestro iOS NFC Solution Work?

Verestro's solution, powered by the newly opened NFC module on iPhones, enables contactless payments (HCE) as an alternative to Apple Pay. Here’s how it operates:

• NFC Payments: Users of participating third-party banking or wallet apps can initiate NFC transactions directly from within the app with compatible NFC terminals.

• Default App Settings: Users have the flexibility to choose any eligible app as their default contactless payment app. This enables the app to support both "Field detect" and "Double-click" features.

• Field Detect: When the user places their device near a compatible NFC terminal, the default contactless payments app automatically launches, followed by user authentication if the iPhone is locked.

• Double-Click: For Face ID devices, double-clicking the side button, or for Touch ID, the Home button, will automatically launch the default contactless payments app, with user authentication if the iPhone is locked.

• Payment Support for Non-Default Apps: Eligible apps running in the foreground can prevent the system's default contactless app from launching, ensuring a smooth payment experience without interference.

NFC on iOS: Key Benefits for Banks

Beyond the monumental cost savings, Verestro's solution provides additional strategic advantages for banks:

• Substantial Cost Reduction: The primary and most direct benefit is the elimination of Apple's fees, leading to millions in annual savings for banks.

• Highly Cost-Effective Deployment: Verestro's deployment costs are anticipated to be ten times lower than if banks were to implement such a solution independently.

• Pan-European Regulatory Compliance: The solution operates under pan-European regulations, minimizing obstacles from local governments and regulators.

• Targeted Market Penetration: Verestro is prioritizing deployment in affluent markets with high Apple Pay usage, such as Scandinavian countries, Germany, France, the Benelux countries, the Baltics, Spain, and Italy, where the cost burden of Apple Pay is most acutely felt.

• Scalability for Large Institutions: The solution becomes particularly beneficial for entities managing over 150,000 active card-using customers.

• Regaining Control over the Payment Ecosystem: By offering their own branded tap-to-pay solutions, banks can influence the user experience more directly and embed themselves more deeply into their customers' digital lives. This strengthens engagement and enables a "top-of-wallet" presence, keeping banks at the center of consumers' digital lives.

• Opportunity for Brand Differentiation: Offering a bank-branded wallet on iOS allows banks to reduce brand erosion and increase direct engagement, a challenge previously faced when Apple Pay was the only NFC option. This enables banks to cultivate customer relationships more effectively.

  
  

Differences Compared to Android and Apple Pay

While Apple's NFC API offers similar capabilities to Android's long-standing NFC payment alternatives, a few differences exist:

• Default App Setting: Unlike Android, it's not possible to directly prompt a user to set your application as the default NFC payment app.

• Special Entitlement: Apple requires special entitlement to access the NFC module. Without Apple's approval, NFC payments cannot be integrated into an app.

• Security Certification: Every app enabling NFC payments needs EMVCo certification. The exact process for security certification on the Apple platform is still being defined but is expected to have slight differences from Android due to fundamental platform differences.

  
  

When compared to Apple Pay, Verestro's solution offers most of the same functionality, with two minor differences:

• Power Reserve Mode: Apple Pay allows payments with the default card for a period after the iPhone's battery is depleted, a feature not currently available with third-party NFC solutions.

• Express Transit Mode: This feature in Apple Pay allows for public transport payments in select areas without unlocking the iPhone, a capability not replicated in the third-party API.

  
  

Who Should Be Interested?

Both traditional banks and neobanks with a large customer base can significantly benefit from Verestro's technology. This new solution, enabled by Apple's opening of the NFC module, presents a powerful opportunity for banks to reduce operational costs. Wallet issuers such as banks shouldn't pass up this opportunity to offer integrated payment in their own mobile app.

While the Verestro solution primarily emphasizes cost savings and core payment functionality, it provides the essential platform upon which banks can then build further value-added services, integrating identity, loyalty, and flexible financing options to create compelling and lasting value for their customers.

For banks ready to unlock millions in savings and transform their payment capabilities, Verestro's iOS NFC solution represents a pivotal step forward. Contact Verestro, a leading financial technology provider, today to learn how our iOS NFC solution can benefit your institution.