GUEST OPINION What is the future of mobile money following the launch of Apple Pay?
The high-profile launch of Apple Pay is set to bring a whole host of benefits to retailers, greatly impacting the use of credit cards while also reducing financial service fees. Matt Clarke, Chief Technical Operator at Amaze, looks at what we can expect to see next
Apple Pay – quick, safe, easy to use via your iPhone, iPad, or iWatch – was launched as the latest revolution for consumers in the UK with big promises and big partners including major banks, retailers, restaurant chains plus many more. However, the US launch 12 months ago was not trouble-free, with banks reporting a surprising level of fraud having taken place, while in London on July 14 (launch day) Underground users found that it took six seconds to get through the ticket barriers, enough time to cause some absolutely chaotic delays.
What will Apple Pay do to ‘real’ money?
The first real question in relation to mobile money is: are we talking about virtual currencies, like bitcoin, or the use of our current currency in a digital way? My view is that the likes of bitcoin have a shelf life, but the mighty $, £, €, and ¥ will evolve through convenient technology to ensure their dominance continues. Yes, early adopters will like the speed and convenience of Apple Pay, but some will want to retain some control and are not convinced by the company’s arguments about lack of security when using your credit card online or at a till point.
Will Apple Pay dominate the market?
This launch doesn’t prevent other payment players from establishing themselves, but the convenience and simplicity of the Apple approach shouldn’t be underestimated.
Users will say to themselves “this is so cool, how easy is this?” but will then quickly come to the conclusion that it is also a dangerously easy way to spend money, even if you are limited to £20-£30 per transaction (which means you do still need your debit or credit card after all…) And of course, you do need the iPhone 6 range or the iWatch for contactless payments, or the iPad Air 2 or iPad Mini 3 which are the only products fitted with fingerprint readers for online sales. Yes, there are currently estimated to be 2.9 million Apple Pay compatible devices in the UK, but that is a pretty small percentage of the population. Nonetheless, there is no doubt that Apple Pay is here to stay.
The really interesting question is what the banks will do – they have mostly backed the launch, and are likely to continue to do so. The one to watch is Barclays, who has already explored the contactless payment area via their own sticky labels and key rings. The early indications are that Barclays will back both approaches, and they may find Apple customers preferring the Apple Pay method to their own. The big BUT here is that all the banks will also support other payment providers, because they cannot afford not to.
The willingness of the banks to engage is critical, and Apple has used its charm to sign up key banks in major markets, which has given them significant momentum at the start – and of course it’s much easier when your technology is already in the hands of a large number of customers.
Where’s the fallout – and when?
The main area where damage will occur to other payment providers is arguably when Apple gets a foothold in web payments. If websites start to embrace Apple Pay as the easy, one-touch way for Apple customers to pay for their goods the likes of Paypal will face a significant challenge.
It works both ways of course – because most sites will want one simple, single gateway to support all their users and despite Apple’s global brand image there are still hugely significant numbers of non-adopters or even those positively opposed to the brand. The solution to the online payment issue is that either Apple opens up its portfolio to become a full service payment provider or at least opens up its technology to partner payment providers.
Summing it up
There is no doubt that the launch of Apple Pay is a smart move from the world’s most valuable company – who would expect anything less?
Is it here to stay? Undoubtedly.
Will it become the giant of the mobile money market? In my view, no.
A recent survey of the top 100 US retailers by Reuters found that fewer than a quarter accept Apple Pay, and nearly two thirds said they wouldn’t be accepting it this year either. Their reasons were insufficient customer demand, lack of access to data generated by transactions, and the cost of the technology.
There is still plenty of space in the market for mobile payment providers, it is a market that will grow – but I think it will be a fruit salad not an Apple orchard!