This week, Apple made its entrance into the mobile payment market while also unveiling a new watch and two larger iPhones
The entrance of Apple into the mobile payment market, with the launch of Apple Pay, could see the demise of the wallet and up the ante for retailers.
The new payment system would allow customers to pay at a cash register by simply holding a device up to a sensor. Apple’s iPhone 6
and Apple Watch both include payment functionalities for Visa, MasterCard and American Express.
NFC seal of approval
In order to process a payment at a electronic point-of-sale (EPoS) terminal instore, Apple Watch and iPhone 6 use the mobile radio technology standard Near Field Communications (NFC).
“This is a big step forward. With Apple on board, NFC gets the final seal of approval it needs,” commented Neil Garner, chief executive and founder of mobile digital proximity technology provider Proxama
following the announcement.
“Apple’s formidable strength is in convincing consumers that they need something, so in that regard its support of NFC is a turning point for worldwide consumer adoption.
“It is likely to spark a reaction from Android and Windows phone makers who will want to ensure their devices match the innovative uses of NFC we expect from Apple.”
Customer experience fail
Garner agreed with Apple chief executive, Tim Cook that previous mobile payments platforms had failed because they did not focus on the customer experience.
“Apple Pay’s design interface and ease of use certainly helps this, but it’s all the other things beyond just payments that NFC technology offers to enhance consumers’ everyday lives.”
As Nils Winkler, chief executive of cashless cross-channel payment system Yapital, commented that the anticipated entry of Apple into the mobile payment market is likely to be the tipping point that sees payment by smartphone become an everyday part of life.
"While this is exciting news, instore mobile payment is only one part of the cashless eco-system – for example, QR [quick response] codes make it possible to buy online or from a poster at a bus stop via smartphone."
Ralf Gladis, CEO of payment services provider Computop
, says that while he expected a more innovative mobile payment system to be announced by the usually groundbreaking Apple, the Apple Pay strategy could also be considered a clever move.
“By aligning itself with Visa, MasterCard, Amex and NFC, Apple ensures its users will be able to pay with multiple merchants globally, which provides excellent user experience. Provided that Apple Pay does not deviate from existing established standards, merchants won’t need a lot of integration work because it’s an established card payment.”
Focus on mobile payment strategy
Meanwhile John Gessau, mobile payments solutions lead at ACI Worldwide
, says that before making any considerations around Apple’s entry into the payment market, retailers need to understand what their goals are in implementing mobile payments/POS strategies.
“This has to be a business decision, as opposed to a technology decision,” said Gessau. “Secondly, retailers should see the current mobile disruption as an opportunity to review their overall omnichannel payments strategy.
“They would do well to avoid leaping into such a volatile environment, deploying a solution that will not meet their needs, only to find that they require a ‘rip and replace’ down the road as the market evolves.”
Gessau warned that retailers need to decide when they want to start accepting Apple payments, what they need to change on the POS, and how they train their staff and help their customers understand the checkout process and related processes such as disputes.
“The key change is the acceleration toward NFC and tokenisation,” he concluded. “Nevertheless retailers would do well to remember that while Apple is a significant player, more consumers have Android phones than iPhones.”