Bandits Steal Berlin IPhone Cash, Showing Payment Hurdle

Bloomberg - If bandits rob banks because that’s where the money is, then it makes sense to hold up an Apple Store in Germany on the day after a new iPhone is released -- because that’s where the cash is.

Late Saturday afternoon, with would-be iPhone buyers still queuing in front of Apple Inc. (AAPL)’s marble-and-glass emporium on Berlin’s Kurfuerstendamm, three masked gunmen stormed a security company’s van that was hauling away the pile of euros the store had taken in over the weekend.

One reason the outlet had so much cash on hand: Germans are famously behind much of the developed world in credit- and debit-card payments, with cash still used in more than half of money spent in stores. The iPhone 6, released Sept. 19, presents an opportunity for Germans to move toward a cashless future.

Whereas Americans, Scandinavians, French and Italians can buy a cup of coffee or a pack of gum with a card, it’s rare for Germans to use plastic for such payments, and it can be hard to find a cafe or restaurant in Berlin, Munich or Frankfurt that will accept credit cards.

Just 15 percent of retail payments in Germany are made by credit or debit card, the lowest among seven countries studied by the European Central Bank in a paper released in June. In the U.S., by contrast, 45 percent of payments are made by card.

While it’s easy to use plastic at Apple’s Berlin store, it’s not uncommon to see customers pay cash for iPhones or computers costing hundreds of euros. A staff member who answered the phone at the shop declined to make a manager available to comment. Police declined to say whether they had any leads on the identity of the thieves. Apple declined to comment on matters of security at its Berlin store.

Apple Pay

A key feature of the iPhone 6 is something called Apple Pay. The service, which the company expects to introduce in the U.S. in October, will let customers shop in stores and online by tapping their finger on the phone’s fingerprint scanner rather than paying cash or swiping a card. Apple hasn’t given details about plans for Apple Pay outside its home market.

“Apple Pay has the critical mass to accelerate the transition toward digital payments,” Barclays Bank Plc analysts said in a note released Sept. 19.

Germans have already started moving -- slowly -- away from cash. People in the country used cash for 53 percent of the money they spent in stores in 2011, down from 58 percent three years earlier, according to the most recent data from the country’s central bank, the Bundesbank.

That change, though, won’t accelerate unless German worries about privacy and data security are addressed, said Richard Crone, founder of Crone Consulting LLC, a mobile payments researcher in San Francisco.

Security Breaches

And those concerns give a system like Cupertino, California-based Apple’s an advantage, Crone said. The technology doesn’t reveal a customer’s identity or payment information to the vendor, which means shoppers face less risk from security breaches such as the recent theft of millions of credit card numbers from retailers such as Target Corp. (TGT) and Home Depot Inc. (HD)

“You cannot get rid of this risk until you get rid of the card,” and Apple’s system does just that, Crone said.

Google has its own cash replacement, software called Google Wallet, and Vodafone Group Plc (VOD), Telefonica SA (TEF), Royal KPN NV (KPN) and Deutsche Telekom AG are trying to gain traction for similar services. While the competition will hasten the introduction of new ideas into the market, it could slow adoption by consumers because it could sow confusion in the market.

“There are a lot of conflicting technologies out there,” said Thad Peterson, a consultant at Aite Group, a research firm in Boston. “Companies and customers have been on the fence because there has been no technological standard in mobile payments.”

Brazen Heist

The heist was brazen. The Apple store, a former movie palace built a century ago, was flooded with people checking out the new phones and shoppers thronged the busy boulevard outside. The bandits rushed the cash transporter and carried off a chunk of the day’s earnings. The robbers jumped in a Citroen sedan and sped off. A short time later, police say they found the burning remnants of the getaway car in a wooded area about two miles from the store.

Though authorities and Apple haven’t said how much the thieves got away with or whether the money was insured, the hold-up won’t do much damage to Apple, which reported cash and investments of $164.5 billion at the end of last quarter.

Apparently, the bad guys didn’t nab any of the new phones while making their getaway.