Mobile Commerce Insider Featured Article

September 08, 2014

Will Apple 'Pull an Apple' in Mobile Payments?

Apple historically has not been the first to enter a new market. Instead, it has waited, sometimes succeeding, and sometimes failing, with a device that is “better.” Apple likely has begun that strategy with the mobile payment features built into the Apple iPhone 6.

In the past Apple has had to confront direct competitors in the form of other device suppliers. In mobile payments, Apple will face SoftCard, the AT&T, Verizon and T-Mobile US mobile payments app, plus the Google Wallet, Starbucks app and others in the retail payments made by mobile phones that displace payment by a credit card or debit card at a retail terminal.

In mobile payments, Apple also will face the Merchant Customer Exchange, a retailer consortium including 7-Eleven, Target and Wal-Mart.

The MCX “CurrentC” network will allow customers to pay with their phones at more than 110,000 U.S. retail locations.

Some of us have argued that Apple was the one company that could really make a breakthrough in mobile payments in developed markets.

The emerging issue now is whether, in fact, Apple’s presence can transform a market that has been slow to develop, even if there have been some successes, including the branded Starbucks app and credit card readers such as Square.

Among the long-standing issues is the matter of value--whether ability to swipe a phone is sufficiently more valuable than swiping a credit or debit card at a retail terminal.

There is an argument to be made that, in fact, the incremental value is relatively small. Some might point to the high use of the Starbucks card from mobiles as an example of how much value might be added.

Others might simply counter that the value is not the swipe, it is the free coffee one earns by swiping the Starbucks app from a phone, instead of paying by cash or card.

The issue is whether Apple now has sufficient device critical-mass, retailers have enough terminals, and Apple has put into place all the needed tools and apps, to change -- and lead -- the marketplace.

If so, it might turn out that Apple grabs leadership because it changes the game, shifting from "payment" to "shopping experience."

Some argue Apple has done so. Aside from the multiple communication modes (near field communications and others), iPhones already have iBeacon, Apple’s location-tracking software, which might be strategic if the business model eventually is shown to be “marketing” rather than “transaction fees.”

Apple’s fingerprint scanners might address high end user concerns about security. Apple’s Passbook app collects virtual coupons as well.

And Apple has essentially been beta testing mobile payments in its own retail stores, where checkouts are handled by any associate with a phone or other Apple device, or on an automated basis in some cases, with no clerk at all.

We’ll have to wait and see whether Apple can succeed in mobile payments as it has with some of its devices: not being first, but being “best.”




Edited by Rory J. Thompson




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