Beyond Apple Pay: navigating the NFC shift

Promoting the acceptance of digital wallets

Smartphones, for better or worse, have become irreplaceable in the modern world. We use them to work, shop, book holidays, stream music, take photos, and even control our home’s heating. Increasingly, they’ve also become quite handy for making payments – whether with a simple tap or scan of QR code – via digital wallets like Apple Pay or Google Pay, giving consumers greater luxury of choice and convenience at the checkout. The number of digital wallet users is expected to grow from 4.3 billion in 2024 to 5.8 billion by 2029,¹ highlighting the growth in this space. Wallets have now become so ingrained into our daily lives that many users expect such mobile-first payment and banking experiences as par for the course.

However, beyond mobile platform providers Apple and Google, issuers have found it difficult to capitalize on the digital wallet trend – at least on iOS. Historically, banks and wallet issuers could only use host card emulation (HCE) technology on Android devices. On iPhone, contactless NFC payments were restricted to Apple Pay, leaving no viable alternative for issuing branded tap-to-pay solutions. This limited issuers’ ability to serve their full customer base or build direct engagement through their own wallets. For banks, in particular, it meant fewer opportunities to nurture customer relationships, increased brand dilution, and additional third-party transaction fees.

That changed when Apple updated iOS to allow third-party access to NFC functionality. For the first time, banks and other wallet providers can now offer tap-to-pay solutions on iOS. However, the technical implementation varies by region. In the European Economic Area (EEA), Apple has enabled developers to use host card emulation (HCE) – a software-based solution that allows contactless payments without access to Apple’s Secure Element (SE). In contrast, markets such as the US, UK, Canada, Japan, Australia, and Switzerland now have voluntary access to the SE, a hardware-based module built into the iPhone. From a user’s perspective, both technologies deliver a seamless experience, but each comes with different technical and strategic implications.

This is an excellent opportunity for wallet issuers to extend digital payment experiences across both major mobile platforms and appeal to a broader user base – especially for banks, given that payments account for around 80% of all customer interactions.²

“Wallet issuers such as banks and merchants shouldn’t pass up this opportunity,” says Jukka Yliuntinen, Portfolio Owner Payment & Identity, G+D Netcetera. “By offering an integrated payment in their own mobile app, issuers can influence the user experience more directly while adding value-added services that reduce brand erosion and increase engagement.”

To get ahead, banks and other wallet issuers must create compelling incentives to motivate consumers to choose their alternative and potentially switch from Apple Pay’s frictionless experience. And to do that, they must think beyond payments.

Creating a wallet consumers actually want to use

One of the biggest ways banks in particular can add value to their wallets and drive adoption is by integrating digital identity services – at least in markets where Apple has opened SE access, including Australia, Brazil, Canada, Japan, New Zealand, the UK, the US, and Switzerland. In these regions, wallet providers can store credentials such as concert tickets, hotel reservations, and travel passes directly in the bank wallet, linking them securely to the customer’s verified identity. This would eliminate the need to show physical ID and provides added convenience and utility for the end user.

This is where banks have a competitive edge over other players. As highly regulated financial institutions, they are well positioned to handle sensitive credentials like identities, as well as central bank digital currencies (CBDCs) and potentially other tokenized assets – the types of credentials users prefer to keep in the hands of trusted and regulated institutions. 

However, while identity is a powerful differentiator – especially for banks – it is not the only lever for success. Instead, it should be viewed by both banks and other wallet issuers as an enabler for other services within and beyond payments to drive users to banks’ or issuers’ wallets. 

In the short term, wallet issuers may deploy low-effort incentives to encourage use, such as offering a $10 reward for the next three tap-to-pay transactions. But human behavior in financial decision-making is rarely linear. Some users may be swayed by incentives and make the switch, others may collect the reward and revert to Apple Pay. The most loyal may not budge at all.

That’s why issuers cannot rely on incentives alone – wallets must provide real, lasting value. Context-aware wallets, for example, could intelligently select the best payment methods based on location or transaction type, offering an even more frictionless experience. At the checkout, wallets could automatically suggest other payment options beyond the linked card, such as installments or buy-now-pay-later (BNPL) plans, giving the consumer more flexibility and control over their spending. 

Wallet issuers have the unique advantage of understanding the needs and payment behaviors of their customers. Banks understand consumer’s spending behavior and financial status, while specialized wallet issuers like merchants know our shopping preferences. They can leverage these insights to tailor offerings and deliver a personalized experience that Big Tech cannot necessarily match. This strengthens engagement and positions bank wallets and other third-party wallets as the preferred choice. 

Choosing the right path forward

Before deciding how to move forward, wallet issuers must carefully consider the technical and strategic direction of their offering. The ability to enable tap-to-pay on iOS varies by region depending on whether HCE or SE access is available. While the user experience is consistent across both, the underlying technology shapes what features can be delivered – and, ultimately, the scope of the wallet proposition. For example, identity credentials are currently only supported via SE, which limits certain value-added use cases in HCE-enabled markets like the EU. 

Beyond technical considerations, wallet issuers must also evaluate the strategic implications of how they deliver their solution. Developing an independent wallet can offer greater control over user experience, reduce third-party dependencies, and strengthen brand loyalty. However, it also comes with higher development and maintenance costs and limited interoperability, which may impact user adoption.

Alternatively, multi-bank or ecosystem-based collaboration can help issuers share infrastructure, reduce costs, and scale more quickly. There are many successful examples of this – such as TWINT in Switzerland, Swish in Sweden, and Zelle in the US – demonstrating how banks can collaborate to build widely adopted, multi-bank wallets. However, while these can be scaled quickly and serve shared customer bases, they also limit the degree of brand differentiation or user experience control.

Meanwhile, other wallet issuers such as merchants have succeeded in building wallets around their core services, combining elements like loyalty programs, vouchers, promotions, and personalized offers to deliver a full shopping and payment experience within their wallet.

A proven partner for mobile wallets

For banks and other wallet issuers looking to enter the digital space with their own branded wallets, but without the complexity or cost of building a solution from scratch, G+D Netcetera’s Convego^® CloudPay is a ready-made alternative.

With Convego^® CloudPay, mobile apps can be transformed into fully functional digital wallets, enabling users to make tap-and-go payments directly from the app. Customers can even set the app as their default for contactless payments, enjoying the same seamless experience they expect from mainstream wallets. This market-proven solution, which supports both HCE and SE, and is deployable across iOS and Android, keeps banks and other wallet issuers at the center of consumers’ digital lives, strengthening engagement and enabling a top-of-wallet presence.

Whichever path banks and other wallet issuers choose, those that move first have the best chance of establishing themselves in the digital wallet space in the coming years. By integrating value-added services beyond payments – such as identity, loyalty, and flexible financing – issuers can elevate the mobile wallet experience and embed themselves more deeply into their customers’ digital lives.

Published: 28/05/2025