Apple + Payments

This was actually a rather long journey for Apple.  To craft the magical experience that you and I now see at the iTuens store was not close to being trivial. To gain a perspective, as always one should, we will present the historic perspective.  This will help establish how Apple got to be into Payments and perhaps where it is going.

Warning: Jump to the last paragraph if you are a TL;DR person, as I am sure what follows will be horrifying. 

Steve vs. The Record Labels

Throughout most of 2002, Steve Jobs and his team were crafting what we now know as iTunes.  Steve was in many cases personally negotiating with the major record labels on how the service will actually help the music industry.  The price per song he established primarily from a psychological standpoint.  At first most of the record labels did not accept a fixed price, let alone one that was not set by them.  The price point of 99¢ for a “hit” single was frightening to the industry. Clearly they wanted more, much more.

Steve vs. The Payment Card Companies

This was not the only issue Steve faced.  This issue always seems to be missed by most writers and researchers of Apple’s iTunes success.  The price point of 99¢ was not aligned with the Interchange Rates (http://en.wikipedia.org/wiki/Int…) established by Visa and MasterCard.  Steve logically assumed that there had to be a price structure to support micro transactions and if there was not, he would will it in to existence.  I was on a team of outside advisors that had to break the news to Steve about how Visa and MasterCard set rates and how, at that time they did not cut any side deals.

There were some negotiations with both Payment Card companies but they really did not go anyplace.  Thus our group suggested the Payment Card Aggregation method for billing that is still in use today.  This is based on a dynamic computer model of buying habits of a typical user and tries to take transactions over an unpublished maximum amount of time, reaching a prescribed dollar amount to group multiple purchases into a single Payment Card transaction.  Thereby reducing the effective rate to a more agreeable amount.   This is precisely why your light purchase days at iTunes may take up to a day or so to produce an email receipt.

Wholesale Payment Costs vs. Low Ticket Transactions

Today, there are many rates that could apply to an iTunes transaction.  In fact, at this point it is very likely that Apple has negotiated rate reductions.  However to give some insight on how costs could work out I will present some basics.  I will select 2 rates that closely match what costs Apple experiences.  I will use the EIRF wholesale Interchange rates and will be assuming a US based Visa Debit Card (1) or Visa Credit Card (2) (http://usa.visa.com/merchants/op…) page 3 and 4:

1) Visa: Debit Electronic Interchange Reimbursement Fee (EIRF) (Exempt): 1.80% + 20¢

99¢ x 1.80% + 20¢ = 22¢ + (2¢ Visa dues and assessments) = 24¢ (Wholesale cost to Visa).

The final cost (Including processing fees of about 2¢) to process a 99¢ transaction it is about 26¢ (26%)

One Song at 99¢ – 26¢ (Processing cost)  = 73¢ – ~69¢ (To Record Label)  = ~4¢ Apple revenue

OR

2) Visa: Credit Electronic Interchange Reimbursement Fee (EIRF): 2.40% + 10¢

99¢ x 2.40% + 10¢ = 12¢ + (2¢ Visa dues and assessments) = 14¢ (Wholesale cost to Visa).

The final cost (Including processing fees of about 2¢) to process a 99¢ transaction it is about 16¢ (16%)

One Song at 99¢ – 16¢ (Processing cost)  = 83¢ – ~69¢ (To Record Label)  = ~14¢ Apple revenue

Breakdown of a typical 99¢ transaction using a Visa Credit Card.

Thus Apple’s true Interchange costs are perhaps between the very high cost of accepting Debit Cards and the lower costs from Credit Cards.  To help Apple out, don’t use your debit card!

By no means is this the only rate that could apply in theory to Apple, there are many (For example: Business Card Not Present  2.45% + $0.15).  In a perfect world, to meet full Visa CPS Interchange, a card not present transaction requires a number of points, one of them is full CVV2 verification and with some Cards there are other points that must be reached.   Apple can not store the Payment Card CVV2 code and to request this number at every whimsical purchase would render the iTunes store useless.  I will have to assume that Visa requires Apple to meet the same security standards that all other merchants are required too meet.  Under current PCI (Payment Card Industry) DSS (Data Security Standards), transaction originating from Payment Cards can not store the CVV2 codes (http://en.wikipedia.org/wiki/Car…), thus we can verify this in  “PCI Data Security Standard (PCI DSS)”, Page 30:

Abstract:
“3.2.2 Do not store the card verification code or value (three-digit or four-digit number printed on the front or back of a payment card) used to verify card-not- present transactions.”

• https://www.pcisecuritystandards…

Transaction Aggregation

As mentioned these are approximate costs but very close to the center of true costs Apple experiences.  This means that Apple is paying between ~16% – ~26% of transactions to the Payment Card Companies for a 99¢ transaction.  There are currently only two ways to mitigate this high rate:

• Payment Transaction Aggregation
• iTunes Gift Cards

The iTunes gift card has had explosive growth. Saving by Apple is achieved by creating perhaps a single transaction of perhaps $20 rather then 20 transactions of 99¢.  Moreover, if the iTunes Gift Card is purchased at a non-Apple location, Apple does not pay any Payment Card fees.  Payment Transaction Aggregation is in a similar vein, as mentioned above.  By grouping perhaps a $20 charge and aggregating transactions together over a few hours or a few days and then presenting this sale as a single transaction to the Payment Card companies, Apple lowers its effective rate, from the double digits to the low single digits.  This is Payment Transaction Aggregation in action and has saved Apple from potential losses in the iTunes store to the profits that are now famous.  Even more over, it did finally satisfy Steve Jobs.  This point is very important as we would not be speaking about an iTunes store if this problem was not solved.  I think it was a rather simple and elegant solution when you factor in all of the issues we faced.  In the future Apple could become closer to a PayPal model (using checking accounts), but this seems less likely.

One-Click Ordering

It must be clearly stated and recognized that the Apple iTunes experience is also partly an Amazon experience.  Patent number 5960411 (http://worldwide.espacenet.com/p…) is one very powerful patent.   Back in the pre web 1.0 days, a young Jeff Bezos thought about the processes and procedures of an Internet transaction.  Jeff (his name is on the patent with others at Amazon) finally committed his ideas to a patent application in the mid 1990s and was later granted the famous one-click (http://en.wikipedia.org/wiki/1-C…) buying patent.  In the late 1990s Jeff was challenged with how to protect the intellectual property and took what was at the time a rather hard line on products that copied the concept.  This prompted negotiations with Apple and a number of other companies.  Apple was granted a license for one-click in early 2000.  We see the implementation of this license at iTunes and the Apple website.

Quality Ingredients 

Thus we have established that Apple has innovated the way they handle transactions and also the way they process orders.  These are the primary ingredients, but there is more.  Apple spent a great deal of time with working with consumer anthropologists and merchant anthropologists both internally and externally to fully research every aspect of the transaction experience.  Apple is in a never ending study of how to optimize the entire experience.  After a Billion+ transactions all of us have come to relish this outstanding experience.  So much so that many are looking to Apple to become a Payment Company.

Virtual vs. Non Virtual Goods And The Apple Experience

Apple currently only collects payments for non-virtual, hard goods when they themselves are selling these goods.  Apple does not currently allow for third party companies to sell hard goods using iTunes accounts.   This seems to be missed by a great many people, even payment industry experts.  Why is this so?  The primary reason is that Apple can control every aspect of the buying and selling experience with the delivery of virtual goods.  This can never be the case for non-virtual goods.  Thus there is a very large possibility that the experience can become very un Apple-Like.

Apple guards its user experience more than any company in the industry and this presents a rather large problem.  Amazon and to some extent eBay/PayPal had to go to extraordinary lengths to achieve “no questions asked” return policies.  Anything less would create a re-tweet firestorm today.  However on the opposite side of “no questions asked” return policies are 1000s of small merchants that very well could be innocent and be driven out of business.  It is a precious balance and Amazon is doing a rather good job.

For Apple to expand beyond Collecting Payment for virtual goods, they would have to create a customer service department and chargeback unit larger then the top 3 Payment Card issuing banks combined, perhaps needing to add over 10,000 people working in customer service at Apple for Payments alone.  I can personally state that Steve Jobs had absolutely no desire to be in that side of business.  I am fairly certain that under the new guidance at Apple this will not change.  However with Steve gone, I can’t be absolutely sure.

Apple + NFC

On the other hand, I am 100% certain that Apple will become a facilitator of transactions for Payment Card Companies.  This means that Apple acts just as a conduit between the customer and the merchant on behalf of the Payment Card companies.  This takes Apple out of the liability loop entirely.  Apple Merchant accounts would not be used for this type of relationship.   There are two primary ways this can happen (there are others but I can not speak of them at this point), either by linking Payment Card(s) to an iTunes account and using this ID as a token to pay Merchants or to implement NFC on iOS devices and to associate Payment Cards in a “wallet” type setting.  In addition perhaps in conjunction to NFC I am rather certain we will also see this in the future, Brian Roemmele’s answer to Siri (Commerce): Will Siri become a transaction completion system?

The Father Of The Starbucks Wallet

It is clear to me that Apple will move to the NFC option first and perhaps never implement an iTunes connection.  I draw these conclusions from a number of public sources (I am not using any private information or violating any non disclosures).  There is absolutely no doubt that Apple is committed to NFC technology.  Certainly not just for Payments but for other interesting new use cases.

I spoke to this in a number of posts on Quora over the last year, some assumed I was insane (perhaps).  In this post I point out not only that the inventor of the NFC protocol, NXP one of Apple’s significant chip provider for a currently unreleased device, Apple also has significant patents covering a spectrum of use cases with NFC: Brian Roemmele’s answer to Why does the current iPhone lack NFC support?.  In 2010 Apple also hired one of the most creative “wallet” designers in the world, Benjamin Vigier.   This guy is a powerhouse with that designed the Paypal Mobile, Sprint MyMoneyManager, Mobile Wallet application for 2 top#5 US carriers, mFoundry Mobile Banking WAP platform, NFC Wallet for a top 3 US bank and led SanDisk mobile commerce and NFC activities.  However his grand achievement is the spectacular Starbucks Wallet: Online and Mobile Payments: What retailer is the most successful in mobile payments?.  Starbucks is the most successful company in mobile payments at over $42 million in transactions thus far in 2012.
We will no doubt see how Apple implements these ideas in 2012-2013 and how well these new service compare to the wonderful iTunes experience.

How Does Apple Do So Well In Payments?

Apple does not operate in a vacuum, the success it has in Payments is directly tied to the success it has had with the iPod, the iTunes Store, iPhone and iPad.  We would not be speaking about Apple and the payments experience they create if they did not do so well in these products.  This point is also lost on many people in the Payments industry that hope to aspire to Apple’s unique and successful processes.  Thus to sum up why Apple is successful in a simple calculation:

iTunes + Payment Card Aggregation + One-Click + Spectacularly Successful Products Sold + Incredible Customer Experience = Apple’s Payment success.

Source: http://www.quora.com/How-does-Apple-do-payments-so-well/answer/Brian-Roemmele

RestoreMeNot
The window restoration feature of Mac OS X Lion is one of the coolest features of Apple’s new OS. Sometimes however, one might not want the windows of a certain application to be restored when launching it. Unfortunately window restoration can only be disabled system-wide and not on a per-application basis.This is where RestoreMeNot comes in and provides a simple preference pane for disabling window restoration for individual applications.

Growl
When you’re working on your Mac, sometimes things happen in the background that you would like to keep track of while working in another application. Growl works with hundreds of popular Mac apps to notify you of specific events, like when a download is completed or when your CD-burning project is finished.

For example, it can notify you when a friend comes online in Adium, when your EOD backup is done, and even pop up abbreviated versions of incoming e-mails–all while you’re working on something entirely different, often with the help of app-specific plug-ins like GrowlMail, GrowlTunes, and GrowlSafari.

We like having control over what gets a Growl notification (which you can handle through easy preference pane settings) and the ability to choose from numerous skins to customize the look of each notification. Overall, if you’re looking to always know what’s going on with your running applications, this free program is an excellent way to stay notified. The newest version requires Mac OS X 10.5 or later.

Choosy
Forget the default browser, Choosy opens links in the right browser. When you click on a link Choosy will do the right thing, whether that’s something simple (like using whatever browser is already running) or something complex (like prompting you to pick a browser, but only when you hold down the shift key and click on a link to google.com). 

Tuxera NTFS
Mac OS X does not support writing to Microsoft Windows formatted NTFS volumes out-of-the box. The solution is here. Tuxera NTFS for Mac is our commercial read/write NTFS software for Mac users. It builds and extends upon the proven stability of Tuxera’s popular open source NTFS-3G to deliver a full featured, commercial grade NTFS driver for your Mac. With Tuxera NTFS for Mac you can access your Windows disks as easily as any Mac disk. Tuxera NTFS for Mac delivers the fastest NTFS data transfer speeds you can have on Mac while protecting your data with its new, smart caching layer.

1. School of Arts / Tetrarc Architects

2. Primary School & Sport Hall / Chartier-Dalix architects

3. Jean-Perrin High School / Atelier d’Architecture Brenac-Gonzalez

4. Umeå School Of Architecture / Henning Larsen Architects

5. Sacred Heart Primary School Library / Suters Architects

6. Panyaden School / 24H > architecture

7. Nueva School / Leddy Maytum Stacy Architects

8. Marysville Getchell High School / DLR Group

9. The National Ballet School / KPMB Architects

10. Stoutland School / Dake | Wells Architecture

Now how to install this plugin:

1. Download it from here (it’s called Archive.qlgenerator)
2. Navigate to  /Library/QuickLook/ or ~/Library/QuickLook/
   Lion users: you can’t see your root folder anymore, just type open /Library/QuickLook/ in Terminal
3. Copy Archive.qlgenerator there
4. Restart Finder.app (Right click Dock Finder icon with holding Option key)
5. Just press SPACE to see inside any zip files.

Vijay wrote an interesting article about using the power of GPUs in your Graphic Card to bruteforce password and crack it down!

Unfortunately, this method works on Windows although in Mac it’s easier to use GPU power with Grand Central. The method supports:

• Plain MD4, MD5, SHA1.
• NTLM
• Domain Cached Credentials
• Oracle 11g
• MySQL5
• MSSQL
• vBulletin
• Invision Power Board
• Drupal
• and more …

In this post I gather every review, teardown, unboxing, unlock, etc.

Keep checking this post as I keep adding new reviews, news, and basically everything you need to know in one place!

PS: please Digg/stumble/twitter this post if you like it.

Reviews

- MacWorld
- “Pick up an iPad 2 after handling an original iPad, and you’ll notice the difference right away. This is a lighter, thinner device.”
- “The iPad 2 also has 512MB of RAM–twice that of the original iPad–and a 200MHz bus speed, likewise twice that of the original.”
- “Though the iPad 2 is an improvement on the original iPad in numerous ways, it’s still an evolutionary product, not a revolutionary one”
- “In short, the iPad 2 is the fastest iOS device ever made, by a long shot.”

- AllThingsD
- Cameras take mediocre still photos, decent video
- Battery life not as strong as first iPad, but impressive.
- “It never crashed in my tests, unlike every Android tablet I’ve tested.”
- “As of now, I can comfortably recommend it as the best tablet for average consumers.”

- Engadget
- “iPad 2 managed an astonishing 10 hours and 26 minutes of non-stop playback” — better than iPad 1 in their testing.
- Cameras are “pretty bad” for stills, reasonably useful for video
- GarageBand is a “groundbreaking piece of software for tablets”
- “The iPad 2 isn’t just the best tablet on the market, it feels like the only tablet on the market”

Benchmarks from Engadget
- NYTimes
- “My friends, I’m telling you: just that much improvement in thinness, weight and speed transforms the experience. “
- 5-megapixel camera on back (no flash) (? Only review to claim this stat and is contradicted by other reviews)

- SlashGear
- “We were able to software decode a side loaded 1.4GB .avi file in OPlayer on the fly, while watching it, without and lag or stutter. The same clip in the same app on the original iPad loads slower and drops frames and audio during playback.”

Apple has posted guided tour videos showcasing the iPad 2 and the new apps including Garageband and iMovie.

Source: macrumors

iPad 2 versus Motorola XOOM

Unboxing

Macroumors.com unboxing photos

PC Magazine unboxing video

Teardown

iFixit

• Finally!!! The iPad has come back to iFixit! And this time, it has a 2 at the end of its name, hence the iPad 2!
• After a much awaited debut, the iPad 2 is expected to fill in the gaps left by the first generation iPad.
• Tech Specs:
  • 1 GHz Apple A5 dual-core processor
  • 512 MB of LPDDR2 RAM
  • 16/32/64 GB internal storage capacity
  • 9.7″ LED-backlit glossy Multi-Touch display with IPS technology(1024 x 768)
  • HD (720p) Rear-facing camera + VGA Front-facing camera

Update: video added

Here is step by step guide:

Step one download QuickSilver and install it.

Step two install Extra Script plugin

install extra script plugin

This plugin allow us to run apple scripts or automators.

Step three Open Automator, select application from ‘Choose a template’ startup screen. Then, add new audio capture and start capture from Movies library to workflow as shown below

save it as “record mic”

Step four rescan quicksilver catalog then trigger quicksilver and just type “record mic” (it will come up sooner).

That’s it! you are now recording from your mic (or any other source, you can change them in Preferences). next time just type record mic in Quick Silver

PS: I tried Firefox and Safari

Any css tips for MS?

The Starcraft story happens in 2030 or something. The main character, Jim Raynor, is officially a cowboy. not that anything is wrong with being cowboyish, but obviously this theme doesn’t work for a game like starcraft. likewise, choice of music is somehow cowboyish 80′s.

All of those are not the most annoying part! It’s not just the theme which seems to be wrong, the actors are so calm in difficult situations; they supposed to be nervous and sad for god’s sake! aliens are killing your people “doc”!!

I stopped playing campaign long ago. It’s sad I can’t get rid of 80′s musics ( which btw is very relaxing and not relative to game context). Good job bilizzard ruining my fav game. Can I have my money back?

First solution is adding a small piece of tape over the bottom left of your iPhone, where there is a small gap. For more info watch below video

the second solution, it turned out the micro SIM touches the sim tray and when you hold your phone it confuses Baseband.

Points 1 and 2 are microSIM contacts, only for that purpose; point 3 is the microSIM tray itself – and if there’s some grounding or shorting going on between 1 and 3, or 2 and 3, or heaven forbid 1, 2, and 3 all at the same time or even sporadically, then again, “Houston, we have a problem.”

While gripping the phone tighter decreases the resistance and increases the capacitance effect on signal attenuation (wicks away more energy off the antenna bands), it could have the secondary effect as I’ve already noted of causing that gap between

points 1 and 2 and the microSIM tray itself, 3.

How to fix it:

• Take the micro SIM out

• use some sort of tape to avoid micro sim touching the edge of your sim tray

• put your sim inside again

a dude who knows about RF explained here why the second fix works for most of us:

Let me add my explanation of why this fix works in many cases. I will qualify my assertion by saying that I have a good working knowledge of RF energy and have held various radio licenses over the past quarter century.

RF energy travels through the air in waves in the form of electromagnetic and electrostatic fields at 90 degrees to one another. The frequency of the transmitted wave has a ‘wavelength’. The transmitting and receiving antennas must be of the proper length to be ‘resonant’ at or near the wavelengths involved. In a nutshell, you will receive maximum signal strength when your antenna is the proper length.

Since we are talking about microwave frequencies here, the resonant length of the antenna is very, very short and will be thrown off resonance by a long ways with just the slightest change of ‘electrical’ length. I say electrical because aside from the physical length, changes in effective length occur with two phenomenon known as inductance and capacitance. Our bodies make for a good capacitor plate and this is how touch lamps can change brightness by sensing a capacitance change when we touch them.

The micro SIM tray is metal on the iPhone 4 and is part of the band surrounding the phone which IS part of the antenna on this new design. If the gold SIM contacts are touching or are too close to the metal tray, they are creating a shift in resonant frequency of the antenna which will degrade its reception of the cell frequencies it was designed for. The SIM contacts are NOT part of the designed electrical length of the antenna, but they can create a change of that length if they touch it. Those SIM contacts need to be as far away as possible from the physical antenna which the SIM tray is a part of on the new phone.

So now, you grip the phone with your finger bridging two of the antennas on the outside and you have killed the reception altogether because the antenna is way off resonance from the cell tower frequencies. Something to note here is that the BOTTOM of the phone’s metal band is the cellular antenna because the transmitted RF is required by law to be as far away from our head as possible.

This fix that the OP posted has technical merit and should be at least tried by those who feel comfortable messing with their SIM cards.

I have no explenation if these solutions don’t work but I would be more than happy to hear from you whether it works or not. leave a comment

PS: a video demonstration for second fix will be added soon

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