Monday, 15 September 2014

How would you like to pay for that?

The consensus on Apple's recent product launch is that its electronic payment system may ultimately be more significant than the much-trailed iPhone-slaved watch. This is partly explained by the underwhelming nature of smartwatches, but it also has to do with the idea of Apple as a market-maker: "In a way, the company is now doing to the card payment business what it did to the music business with the iTunes store". Some have even gone so far as to claim that Apple is now a bank, and that this is a good thing: "Consumers will have more rights from Apple than we were given by the bankers and their Washington cronies". Well, obviously.

First reactions are notoriously unreliable, but even so, the reception for Apple Pay has produced some amusing conflicts in interpretation. Some espy the decline of hardware: "this week’s announcements showed that Apple’s future will be less about hardware and more about its 'ecosystem' - a combination of software, services, data and a plethora of partners." Others see the continuing importance of hardware: "Other mobile wallets exist across multiple hardware platforms, with no consistency to support biometrics or other verification aspects such as location information. With Apple Pay, Apple controls both the hardware and the software". Apple Pay is both revolutionary - "a classic Apple moment of simplification and integration" - and not disruptive but complementary - "Apple has now successfully injected itself into this market and may gain a foothold". As William Goldman said about the hype mechanics of the film industry, "Nobody knows anything".

The ability to pay - to express a preference - has long been dependent on the provision of status-oriented credentials rather than just broad money, despite the neutrality claimed by economics textbooks. This led to the habit of the rich employing distinct denominations for the valuing of property, such as the livre in the France of Balzac and the guinea in the UK of Austen. The latter persisted for over 150 years as the denomination of wealth, from houses to professional fees, and it was still common to see guinea price tags in "posh" furniture shops and tailors in the late-60s. The denomination disappeared following decimalisation in 1971, but its use had started to decline with the launch of credit and charge cards in the preceding decade, which provided statements in pounds, shillings and pence.

The introduction of the credit card as an elite token, with its associated credit rating, also marks the point at which the democratic claim "My money is as good as anybody else's" began to lose its social power, to be replaced by the condescending "I'm afraid your card has been refused". We have now reached the stage, with contactless payment that depends on an expensive phone or watch, where mere cards, like cash and cheques before them, have become a sign of inferiority (London Transport's dropping of cash, combined with the Apple Pay announcement, shows how the window of acceptable methods is inexorably shifting).

Some have tried to sell this as egalitarian - "cash imposes its highest transaction costs on the poor" - in much the same way that the punitive interest rates of payday lenders are excused as a flexible service that suits its knowledgeable consumers. Some even seem more concerned about the effects that it will have on the well-off: "Apple Pay and similar technologies will make the experience of spending more abstract, and thus easier, than ever before." In fact, the same technology will offer to rescue you from this anxiety of financial promiscuity, providing greater control over your balances and credit rating. After all, you're worth it.

Many have praised the security architecture of Apple Pay, particularly the way it uses tokenisation to avoiding storing card details on the phone or revealing them to merchants. This might appear like timely good news after the unfortunate business of Jennifer Lawrence's photos and the presumed iCloud hack, but what it reveals is Apple's ambition not to disintermediate card providers or banks but to extend the zone of protection that is implicit in all their "closed" products. Industry observers would talk of Steve Jobs's reality distortion field, but this witticism ignored the truth that the basis of Apple's worldview has always centred on the provision of a protective force field for the status anxious. Apple Pay is not revolutionary but deeply comforting.


  1. I'm not sure the guinea is quite dead. You buy racehorses in guineas IIRC, but not greyhounds.

  2. Are you sure about that, Luke? I know the guinea still appears in the title of certain races, such as the 1,000 Guineas Stakes, though presumably the actual prize money is in pounds and considerably larger than £1,050.

  3. The Sport of Kings

    Tattersalls Newmarket

    "4. Bidding
    The Auction will be conducted in Guineas. Subject always to the discretion of the Auctioneer no person to
    advance less than 20 Guineas up to 1000 Guineas; 50 Guineas up to 2,000 Guineas; 100 Guineas up to
    5,000 Guineas; 200 Guineas up to 10,000 Guineas; 500 Guineas up to 20,000 Guineas; 1,000 Guineas
    up to 50,000 Guineas; 2,000 Guineas up to 100,000 Guineas; 5,000 Guineas up to 200,000 Guineas;
    10,000 Guineas up to 500,000 Guineas, and 20,000 Guineas thereafter."