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New Gold Rush: why banks are racing to be the first card in your Apple Pay

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Beyond the home screen, beyond the lock screen, the battle for the pre-screen

Over the weekend I was hit with a deluge of advertising from banks and credit card companies encouraging me to get ready for the wonder that is Apple Pay. It seemed odd to me that big-name financial institutions would be falling all over themselves to promote a service which hasn't yet launched and isn't exclusive to them. But there are actually three very good reasons for the big players in banking and credit to be shoving their way to the front of the line on your Apple Pay.

First off, banks are keen to have their customers use a digital wallet over a credit card because it could save them money. They don't have to print you up a fancy piece of plastic every couple years, more often if you lose it or it's stolen. Speaking of stolen, many banks believe a digital wallet with Touch ID and secure digital elements will greatly reduce the fraud and theft currently afflicting our credit card system. But saving money is not the principle reason banks are competing for that primary slot.

Secondly, Apple has a history of succeeding where others have failed. The banks know that hundreds of millions of people already use an iPhone. They are betting it can go mainstream where Google Wallet and PayPal have so far remained niche. That belief is based on the last decade, in which Apple took products — MP3 players, smartphones, tablet computers — and made them into a huge commercial success where others had tried and failed. Banks are declaring it the game changer.

There is no guarantee Apple Pay will take off, but if it does, banks and credit cards are desperate to be the first ones you load. That brings us to our third and most important point: Apple Pay will work with multiple credit, debit, and reward cards if you load them into Passbook. But as our hands-on video demonstrated, most of the time people will probably be relying on the default card, avoiding the hassle of unlocking the phone and tapping around in Passbook.

It helps to think of this competitive dynamic in terms of the mobile apps you currently use. We used to talk about the battle for the home screen: being one of the first apps you see when you unlock your phone. The arms race has since accelerated, pushing the battleground to the lock screen, which you can often see without touching a single button. Think of Apple Pay with Touch ID as the pre-screen. You're holding your phone, you buy something, you put your phone up to the register with your finger on Touch ID, and boom, you've paid. No swipes, taps, or anything else required. It's no wonder banks are competing zealously for prime real estate on what should be a core function of the modern smartphone.