Apple has already reinvented the phone and the tablet. Will the wallet be next?
On September 9, Apple is expected to unveil its new iPhone 6 and rumor has it that it will include a mobile payment platform set to directly compete with Google Wallet. If reports are true, the new phone will use near field communication (NFC) technology and Touch ID to allow users the option of paying in-store with the touch of a finger.
Apple is relatively late to the mobile payment scene, however. After all, Google Wallet launched in 2011 to much fanfare before fizzling out not too long after. But according to John Haro, chief technology officer at mobile marketing company Vibes, Apple’s payment system will succeed where Google’s failed because Apple has the “late movement advantage” along with a history of “taking existing ideas, waiting a few years, then knocking it out of the park.”
One such idea is NFC. When Google Wallet launched, merchants were reluctant to upgrade to expensive NFC technology, but now, most retailers are equipped with low-powered, lost-cost Bluetooth technology. These inexpensive proximity sensors will enable Apple payments to use NFC, Bluetooth, and their own iBeacon systems to pinpoint customer location in a store and enable transactions.
Apple has also paired with American Express, Visa, and MasterCard to make payments accessible to most credit and debit card users. Google Wallet was limited to MasterCard users and merchants who were already equipped with PayPass technology.
Customers have long been wary of mobile payments, much preferring the in-app purchasing options offered by companies like Starbucks and OpenTable. But Haro believes that customers have just been waiting for a program that makes “tapping a phone as easy as swiping a card at a point-of-sale system.” Apple payments promises to create a frictionless user experience by bundling credit card information with loyalty cards and coupons.
Security concerns about mobile payments have also impeded previous systems. According to Haro, Apple’s Touch ID technology, introduced on the iPhone 5s, will add an additional layer of security to the mobile payment process that’s been missing in previous mobile wallet technology. He says, “Touch ID is a great consumer convenience. It’s not getting sent to iCloud or developers; it’s locked onto a secure enclave.”
A successful mobile payment system will offer “a one-two punch in terms of promotions to payment,” according to Gregg Stewart, founder and chief executive of 3rd Act Marketing. Mobile payment makes the buying process “almost frictionless,” enabling marketers to offer loyalty programs, promotions, and push apps at the point of sale to drive customer interest.
Haro says that many of the large brands he works with are realizing the limitations of paper and plastic and looking to “ditch loyalty cards” in favor of using software to send offers and digitize loyalty programs. Apple’s existing Passbook technology coupled with a payment feature stands to make a traditional wallet obsolete while giving companies the opportunity to better target the individual needs of customers.
Apple payments also opens the door to new possibilities for mobile reach across a multitude of different platforms, including wearables. While wearables like Google Glass and Fitbit are currently just a fringe market, Haro expects Apple to launch the iWatch in conjunction with the iPhone 6 and believes that “some play between watch, tablet, and phone” is the next logical step for the company.
Apple’s success in the mobile payment arena hinges on timeliness. Both Haro and Stewart agree that Google Wallet failed because merchants weren’t ready for the technology and customers saw no reason to change. But most experts are hopeful that Apple payments will succeed. “Apple’s success with consumer experience can make major waves in this space,” Haro says. “It’s an exciting time.”
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