Ready to go: Mobile payments

For years, mobile service providers, credit card firms and Internet companies such as Google have been trying to integrate digital wallets into mobile phones with little success. With Apple now entering the fray, many industry analysts say the era of mobile payments with smartphones may have finally begun.

To this end, Apple is using the same technology as the current service providers: near field communication (NFC), in which a chip in the phone makes contact with a correspondingly equipped reading device.

Nothing really new

Seen from this angle, Apple's is not a great innovation, says Oliver Hommel, industry expert at consulting firm Accenture. "The company is not doing something that is remarkably different from others," he said. But Apple is known for quickly adopting products and services, and the "marketing machine is also very good," Hommel said.

Ulrich Dietz, head of the IT service provider GFT, believes Apple's system will establish itself faster than all the attempts that have been made so far by other companies. At the same time, many observers point out that Apple has chosen the right time to enter the market.

First, the necessary infrastructure is now being aggressively expanded. Few places have so far been able to accept contactless payments, one of the major hurdles the sector has faced until now. But things are changing. MasterCard, for instance, already announced the goal of making all card terminals in Germany NFC-capable by 2018 - and in all of Europe by 2020.

Right timing

An even more important factor is the radical changes that are set to take place in the US market, where Apple's iPhone has a 40 percent market share. Conventional magnetic stripe cards are obsolete. From October 2015, they will be completely replaced by chip and PIN, which is already well-established in Europe. As a result, payment terminals are set to be replaced en masse in the near future, and most of the new models are capable of handling NFC.

Apple has the potential to shift the balance of power in the business. There are signs it could become very difficult for banks to get past Apple and credit card companies, Hommel said. "Apple alone will control the access to the secure element chip in which the data are stored. Apple is, therefore, certain to charge banks either in the form of a transaction-based fee or by setting a fixed price," he said.

Apple has so far maintained that the system will not impose any additional costs on customers and businesses. But the New York Times reported that the company had been offered lower processing fees by banks than they normally accept.

And when will it come to Europe?

Negotiations over the launch of Apple Pay in Europe are already taking place, an executive of credit card company Visa was quoted by the Financial Times as saying. Apple has so far not given any indication as to the timeframe for the launch of its system outside the US, where it is set to begin operations in October.

Dietz says that German banks that are working on their own payment solutions are now under much greater pressure. "If they still believe that they can set up their own systems, it is simply an ego trip that will end up draining millions," he said.

The German banking industry should quickly enter into discussions with the IT industry, Dietz said. "Then they can bring in their technologies, which could be used across Europe." To that end, he sees an opportunity outside the Apple world in the form of Google's Android operating system, which has a higher market share than that of the iPhone.

Banks under pressure

"From customers' perspective, banks will become replaceable as they will be crammed into Apple's digital wallet," Hommel said. But he says telecommunication companies will be the big losers from this development, as they will no longer be needed for this mobile payment system.

For years, telecom service providers have offered the SIM card as a data storage vault. With Apple's additional security chips, however, these cards will become superfluous. To retain their position, mobile service providers will have the task of preventing other manufacturers from following in Apple's footsteps.

Furthermore, banks may have to resort to using the services of credit card companies if they want to use Apple Pay, Hommel said.

With its support, Apple is transforming a process called "tokenization," in which the user's data related to credit card activities are not stored on the mobile phone, but only in a code assigned by the user. On the one hand, the system is more secure as the information cannot be read out. On the other hand, nothing works without the service provider.

For Apple, it is extremely important that customers do not witness the power struggles taking place behind the scenes. In the end, success is determined by "the convenience the system offers customers," Dietz said.