Zehra Chudry, Conference Director of PayExpo 2015 asks, will Apple Pay do for the payment market what its sister products did for other industries?
Yes, Apple Pay will improve the payment market.
Why? Well, first I think it is important to look at what the Apple family of products has done to its respective technology platform markets.
Apple, long considered an aspirational brand, tends to enter a saturated and competitive market late in the game and completely transform it. Tim Cook, Apple’s CEO, described this as “taking an old system that doesn’t work well and putting the customer at the centre of the experience.”
The Apple style is not to wait for customer demand, but to create an intuitive product that seamlessly fits into people’s lives. Apple’s success has been built on introducing technology that people don’t know that they need until they have it. For example, people are now more likely to go back home if they have forgotten their smartphone over forgetting their bank card. Take a moment to consider this again – the vast majority of people would rather spend the day financially vulnerable than socially disconnected.
So why is this important for Apple Pay? For too long the payments sector, merchants and consumers around the world have been battling with the ‘imminent’ wide-spread adoption of NFC (near-field communication) payments. Merchants waiting for consumer demand before they invest in upgrading their POS terminals, consumers waiting for outlets to widely offer NFC payment acceptance. Bear in mind that NFC technology is very old by modern technology standards. This ‘chicken or egg’ situation has held the industry in checkmate of sorts.
Research by technology company MPayMe indicates that despite over 50% of the UK population owning the necessary smartphones to make a point of sale payment in this way, less than 10% had done so. Mark Prior-Egerton from The Logic Group comments: “While there has been the impetus within the industry to make wallets an everyday reality, consumer interest doesn’t seem to quite have been piqued just yet.”
But we know that Apple doesn’t wait for consumer interest. It creates it.
A quick search on Twitter shows the massive number of consumers in the US who have started using Apple Pay over the past few weeks. Yes, there are some security concerns, as there are with any new technology. However, when compared to traditional methods of payment, Apple Pay offers a more secure form of payment, especially when coupled with a secure point of sale system.
So, has Apple Pay solved a problem the everyday consumer has? No. Current forms of payment in cash or plastic suit the job just fine as they are.
In fact, one of the early recognised weaknesses of Apple Pay is that it doesn’t integrate with loyalty cards, so at the till there remains the added step needed to present a card to the cashier.
This is where the forthcoming CurrentC, MCX’s mobile wallet, currently has one up. Created by merchants, for merchants (with the driving benefit of no interchange fee), this mobile-only payments network directly tackles a real-life consumer problem – ‘I have too many loyalty cards in my wallet.’
In a rather controversial move last week, CVS and Rite Aid, whose loyalties sit with CurrentC, disabled Apple Pay acceptance at all their till points. In my opinion, this blockage and stubbornness to accept Apple Pay by some retailers is going to leave them rather embarrassed when they finally give in to consumer demand and re-enable contactless payments at the till. They will give in, because, to quote Tim Cook “retailers will have to do what shoppers want.”
Remember that within its first 72 hours, Apple Pay had hit 1 million activations. Will CurrentC see the same loyalty from their customers? Certainly not.
So, is Apple Pay the trigger the payment industry has been waiting for? Is the tipping point for wide-spread NFC merchant payment now on the horizon?
I believe so.
The paradigm shift has begun.