Does Apple Pay actually reduce branding that much? I bet I'm not the only one who saw the Apple Pay demo and noticed that it displays a nice, large, full-color image of the card being used. Cards with a certain cachet, then (AmEx black, other high-end cards) will still be quite prominently displayed. Indeed, a backlit display might even make more of a brand impression than the physical card, in some situations.
I also am not certain that Apple Pay "massively encourages" a single default card. It looked quite easy in the demo to display multiple cards and switch between them. Looked easier than taking a card out of a crowded wallet and putting it back in, actually.
Eh, as far as default goes, it is another step; the second page of google results is easy to get too, but people don't. Part of what generates alternate card usage today is the messy wallet, sometimes the card isn't in the right place, or doesn't come to hand.
Also there are some practical in RL issues that come up with most NFC payment readers (namely a lot of the installed readers have short range, and awkward pad placement) which makes non default much less attractive.
As for the display issue, the issuers concern is that they are pretty limited as far as making things distinct. I mean hell, every card company is going to have black cards. There are no sideways cards, no premium materials, no metallics, etc. They have a relatively small image, which has to still look good even if cropped to lose the bottom 80%. Basically they get space for bank logo, card logo, and a non distracting background.
So if they are willing to give up on all that and a fee, it doesn't seem all that out of the question for them to allow their logos to be used on a flexible card, and (presumably) not pay a fee.
I also am not certain that Apple Pay "massively encourages" a single default card. It looked quite easy in the demo to display multiple cards and switch between them. Looked easier than taking a card out of a crowded wallet and putting it back in, actually.