When Apple speaks, everyone listens. The Apple Pay launch was no different – touting a service that allows you to load your credit cards onto Apple’s devices and pay for goods wirelessly.
While Apple is scoring buzz, the company is far from a first mover in mobile payments, an industry estimated to be worth more than a trillion dollars by 2016. Key players such as Google Wallet, Isis, Square and PayPal have all experimented with ways to complete transactions at retail through mobile “wallet” apps. Yet no one has figured out a way to really scale their platform into a real, viable service that shoppers will trust and use.
It’s a chicken-and-egg problem. Consumers won’t adopt the technology until it can be used across a significant number of retailers; retailers are unwilling to invest in the technology until there is mass consumer use.
So, how can Apple win in this space at a time when the payments marketplace is fragmented and consumer confidence is still low?
Here’s why Apple may be a superior option to make a real difference and lead:
1) Apple Drives Demand
Most would guess that the first company to reach the most amount of consumers, in the shortest time, with the least friction will win. The odds are certainly stacked in Apple’s favor here given their pure volume of market share across multiple devices. Because of this, and given their reputation for pushing emerging technologies mainstream, Apple Pay has the potential to greatly increase mobile payment growth across the board as the company will likely sell tens of millions of new phones with the service pre-loaded. (Of course, to reach mass adoption, Apple’s solution needs to be universal, available from any location and device – not just iPhones.
2) Higher Security
Security justifiably remains a huge concern for mobile payment users. While Apple touts its system as more secure than using debit or credit cards, people still must learn to trust Apple’s products as the gatekeeper of their financial data, particularly amid high-profile breaches at retail such as Target and Home Depot. Apple posits that as more iPhone 6 units are purchased and tech influencers begin using Apple Pay, they will help educate the not-as-tech-savvy and financially distrusting. Further, Apple Pay vows never to store your credit card information or payment history in the cloud, or even “collect it.”
3) Superior Experience
Undoubtedly Apple’s greatest advantage. Apple has always prided itself on the simplest, most elegant user experience; in addition to its existing share of market, you already have mass, longstanding familiarity with this experience. For a user, the payment process for Apple Pay couldn’t be simpler thanks to the improved performance of Touch ID sensors in the iPhone 6 and 6 Plus.
4) Compelling Added Value
People are habitual, and haven’t adopted mobile payments yet because cash and cards are simple, reliable and ingrained. Tapping a phone is not necessarily easier than swiping a card, so you have to go beyond the transactional and give the shopper something extra to save them time and money. This is where Apple has a place to play. It could be connecting to special offers or linking seamlessly to credits in iTunes. It could be a speed lane for check-out at retail, automatic rewards and loyalty points. For retailers, this could eventually link to customer data, allowing them to serve up more personalized offers and benefits. Sky’s the limit.
5) Potential Retailer Partnerships
While consumer adoption is key, retailer relationships are just as important. Currently, only a limited number of stores accept Apple Pay, and many have deliberately chosen not to partner with Apple yet due to their own initiatives or POS restrictions (with Walmart and Best Buy being two of them.) If Apple can forge relationships with enough retailers, both large and small, to drive usage of the service at their POS system, then they will scale dramatically. Apple must work with retailers to make it as easy and cost effective as possible, and prove that the platform actually gets shoppers to spend more in retailers’ stores.
Changing behavior is not easy, but for Apple, they would seem to have a leg up on many players —and enjoy the permission that vast numbers of people give to Apple to play in new spaces.
To really win it, Apple needs to:
- Make their platform device-agnostic
- Build better bridges within the retailer world,
- Create a network that works together as a truly collaborative business unit.
- Respect valuable customer data
- Most important, for in-store or online retail, position their platform as a win-win solution for retailers looking to create closer, more loyal relationships with shoppers.
What’s certain? Whoever wins, mobile payments are the future of shopping.
Mary Kotyuk is a Director of Marketing Activation based out of Momentum Chicago