In store mobile payments is one of those industry buzz phrases that’s been flying around for some time but hasn’t really transitioned into the mainstream business and consumer vernacular. While most of us are familiar with the concept of making online purchases direct from our mobile, how many of us have considered pulling out our phones to pay for a physical in store purchase? Not many I’m guessing. But if industry giants Apple, Samsung and PayPal have anything to do with it, you’ll be reaching for your digital wallet over your leather wallet a lot more in the future.
Below is the first of a 3 part series on the ins and outs of each company’s approach in gaining mainstream acceptance of this new payment type.
Apple – Brand on their side, merchant acceptance a hurdle
Ok, so it’s not available in Australia yet but already Apple Pay (available in the iPhone 6) looks like it will score high on the consumer convenience side. Why? Well, to start with, loading cards into Passbook (your digital wallet) is relatively easy. Simply add your first card by linking up your Apple ID then, once that’s done, you’re ready to go shopping. With Apple Pay there’s no fumbling around with opening apps and ‘checking in’ to stores once you’re at the cashier. When ready to pay simply hold your phone near the contactless reader on the EFTPOS terminal, press your thumb down on your phone’s Touch ID and hey presto, your payment’s complete.
So far it appears the real and only major hurdle to Apple Pay will be how fast merchants across the world can adopt contactless terminal technology, otherwise known as NFC. In September last year, Time.com reported that only 2.4% of all US retailers currently had NFC enabled terminals installed. That’s an epic hardware upgrade for merchants, which could prove a thorn in the side of Apple’s payment domination plan.
Good news comes Apple’s way in late 2015, when US merchants will be required to start upgrading their hardware in order to transition from accepting swipe based cards with signature to more secure chip based cards (EMV) with PINs. I emphasise the term start upgrading as the US are notoriously slow in moving with the times on card technology compared to their European and Australian counterparts. They could continue to prove laggards in this respect. Some analysts estimate the total cost to the industry of upgrading sits at around $8.65 billion. Certainly not small change for an economy already under pressure.
But let’s not forget which behemoth we are dealing with here – Apple. They’re market makers in many respects and if anyone can get the rest of the world to sing their tune, it’s them. Pairing their cult inducing marketing savvy with their incredibly deep pockets, I wouldn’t be at all surprised to see some clever Apple driven incentives heading merchants way later this year in the aim of getting them upgraded sooner. Certainly in some markets like Australia, where NFC acceptance is growing rapidly, they will achieve fairly quick penetration relatively easily. And lastly the form factor with Apple Pay is BIG. I’m pretty positive people will actually want to use Apple Pay because it feels good. That may sound strange, but form factor and consumer experience are what have driven the Apple success story for a long time. They certainly haven’t lost sight of that with Apple Pay.