Is Apple Pay set up for success?

  • September 2014
  • Posted By Greg Garson

What the announcement of iPhone 6 and Apple Pay means for the future of mobile payments

Apple is taking the lead in solidifying the standards for mobile payments, and has spent time on critical aspects of the product to give it the best chance of capturing as much of the payments space as possible. Four key aspects of the launch of Apple Pay will contribute to its success:

  1. Focus on the customer experience – I completely agree with Tim Cook that the shortcomings of the other players to-date has been a focus on the infrastructure or developing a methodology that relies on changing the user experience rather than determining how to take an already simple process and make it more simple for the user.
  2. Emphasis on security – consumers continue to express concern with the security of mobile payments, specifically the “storage” of sensitive data on their phones.  Apple smartly developed and positioned security technology and methodologies to build trust with consumers.
  3. Achieving immediate scale – the best opportunity for Apple to put the iPhone at the center of payment behavior is to minimize the number of times a consumer cannot use their device to pay. To support this, Apple set up a fairly sizable foundation of merchants that will have the functionality enabled to accept Apple Pay by October.  Equally, Apple knows that the conversion of the US marketplace to EMV will mean the vast majority of US merchants will be able to accept NFC payments shortly following October 2015.
  4. Getting devices out there – Apple’s number one Achilles heel is around the ubiquity of the iPhone hardware – you have to have an iPhone6 or 6+ to use Apple Pay, and that will be a fairly small user-base for quite some time. I am dubious about the “draw” of switchers and upgraders on the basis of Apple Pay alone.


Tim Cook introduces Apple Pay on Tuesday. Image Credit Jim Wilson/The New York Times

Tim Cook introduces Apple Pay on Tuesday. Image Credit Jim Wilson/The New York Times

Merchants won’t continue to support a payment solution that supports a limited population (iPhone6 users), especially if they have to maintain the infrastructure, processes, and customer communications around it. Already, Best Buy and Wal-Mart have announced that they will instead support CurrentC, the future platform from a retailer-owned mobile technology group called Merchant Customer Exchange.  CurrentC is expected to be available through the Apple App Store and Google Play for Andriod devices in 2015. The app will link with customers’ checking accounts, retailer gift cards, and some merchant-branded accounts.

Apple may have done its best to set Apple Pay up for success, but they are also paving the road for other mobile payment solutions to enter the market.


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