Will Apple Pay do for the payments market what its sister products did for other industries?

Yes it will.

Why? Well first I think it is important to look at what the Apple family of products have done to their respective technology platform markets. Apple, long considered an aspirational brand, tends to enter a saturated and competitive market late in the game and completely transforms it. Tim Cook described this as ‘taking an old system that doesn't work well and "putting customer at centre of experience..."

The Apple style is not to wait for customer demand, but to create an intuitive product which seamlessly fits into people’s lives, and before they know it, becomes an everyday essential. Apple’s success has been built on introducing technology which people don’t know that they need until they have it. For example, now people are more likely to go back home if they have forgotten their smartphone over forgetting their bankcard. Take a moment to consider this again in detail - 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 payments. Merchants waiting for the 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 a checkmate of sorts.

Research by technology company MPayMe indicates that despite more than 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 says: “While there has been the impetus within the industry to make wallets an everyday reality, consumer interest doesn’t seem to 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 following its recent launch. 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 secure form of payment, especially when coupled with a secure point of sale system.

Has Apple Pay solved a problem the everyday consumer has? No.

But is Apple Pay the trigger the payments industry has been waiting for? Is it the tipping point for wide-spread NFC payment now on the horizon?

I believe so.

And the scope doesn’t stop there. The wider potential of building on what Apple Pay has enabled is vast. Currently one of the early recognised weaknesses of Apple Pay is that it doesn't integrate with loyalty cards, so at the till there remains this added step needed to present one of these to the cashier.

But imagine once this is integrated. The seamless till experience a merchant could potentially offer their customer will drive any merchants currently ‘sitting on the fence’ to adopt this. Apple Pay carries the essence of Henry Ford’s words: “If I had asked people what they wanted, they would have said faster horses”. Apple already know not to ask consumers what they want, because we are going to need Apple Pay.

The paradigm shift has begun.

 

By Zehra Chudry, Conference Director of PayExpo 2015.

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