Innovation in payments tends to be evolutionary, rather than revolutionary. The success stories in payments tend to be based on taking what’s already there and making it work better. This approach also happens to be the way Apple has approached technology innovation for its successful product lines.
An Apple move into payments has been much debated over the past few years and this week we have at last seen their play in this market with the announcement of Apple Pay. Much has already been written about Apple Pay but in summary it improves both online and contactless payment experiences by incorporating NFC into the iPhone 6 and 6 Plus, utilising Touch ID and Passbook as a consumer friendly front end plus a secure element to manage the security stuff.
Consumers are better protected than with regular card payments because no consumer data is passed to the merchant – the transaction is handled using one-time security tokens. Improved transaction security is increasingly seen as critical by all parties in the payment chain with the frequency of thefts of customer card data. Removing customer data from the payment process is perhaps the most disruptive element in the whole Apple Pay product.
Even adding cards to Apple Pay is simple – you just take a photo of them.
Will Apple Pay catch the imagination of consumers? A combination of the Apple brand, device compatibility, card scheme support and (in the US at least) bank and merchant support means that it stands a good chance of becoming a mainstream way to pay. But consumers are fickle characters …
And of course Apple Pay works with the Apple Watch (which also extends Apple Pay to the iPhone 5, 5S and 5C).
My biggest disappointment with Apple Pay – it will be US only at launch!
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Two key bits of information that were missing from the Apple Event presentation:
> Exactly what is Apple’s business model for this; i.e. WHO pays WHO for using the service
> How much will each transaction cost (the party paying)?
The event was all about what it means for consumers. I guess Apple will benefit financially from improving transaction security and of course driving device adoption.
However it’s not much good launching stuff when it doesn’t get market traction. Apple seem to have the right partners lined up and are addressing consumer needs in a way that should help adoption. Apple is rarely the first but often do it better – and that’s what counts. Yes it’s been expected but perhaps now is the right time to do it. Anyway, iPhone 6 pre-orders open this Friday so get your card out!
A really interesting view on this is from the Daily Tech website. They rightly say that Apple’s adoption trails Microsoft by two years, Google by three, and Japanese firms by as much as a half decade. Some are mistaking its long-overdue bid at secure mobile payments for “innovation”, when in reality they closely emulate features that rivals have carried for up to a half decade or more by now. But, because it’s Apple and because of the brand power it will be something people want, which is going to be very different from the reality of when they eventually get to use it.
So, this is clearly not innovation and to be honest, not even sure it’s evolution in the sense that this has been expected for so long. One for thing for sure though.. it’s not revolution.