Why Apple Pay won't work

I'm not necessarily saying Apple Pay is going to work, but I don't think these are strong arguments against it.

1) Fees: Everybody charges fees. Any competitor who wants into the market is going to charge a fee. The fact that nobody has succeeded in this in the American market means the market needs something that works first before fees become the issue. Apple can always lower the fee if they feel pressure. Remember that nay-sayers said the App Store 30% cut would never work because it was too high, but anybody who remembers this market before the App Store remembers that 3rd party payment services were often just as expensive if not more because you often had to do the labor of tying multiple services together (web site, shopping cart, payment authentication). Additionally, Apple promised and delivered in being able to draw in and convert more potential customers into buyers.

2) Inferior tech: Technology isn't the problem. The technology has been around in other countries. There is something different about the American market that has prevented adoption of this kind of transaction system. Apple's belief is it is the seamless integration, not the technology.

3) Little incentive for adopters: Self-interest may prove to be enough incentive. You only need to think back to McDonald's and other fast-food's semi-recent fight to remove credit card signatures from small transactions. They fought hard for this because their own market research found that signatures discouraged credit card transactions and slowed down lines. Their other research showed that people spent more money on average than compared to when they paid with cash (because they didn't have to worry about not having enough cash on hand). Merchants may have enough self-interest to adopt this system in order to speed up lines (more customers with fewer cashiers) and get higher spending per customer.