Apple Pay was introduced this week and just like with the Apple Watch it is receiving much attention, not all from believers. Google Wallet has been around for since 2011 and has been available in many locations. Why they have not promoted it much more, I will never understand. It allows for a typical Apple late entry approach that will in my mind make true mobile payment finally come true.
Why will Apple Pay work? Why will Apple Pay help accelerate mobile payment adaptation? A few key reasons:
- Even though the Google Wallet app has been downloaded on many Android phones it is not as easy to use. Apple Pay is build on a very robust platform and is very easy to use. With new iPhone 6 volume building quickly it will gain momentum quickly.
- I think they have been very clever to announce it at the same time as the Apple Watch. With the Apple Watch it will be even more easy to use since you just raise your arm.
- Apple has also a very good track record building networks of companies that will support it. Their first wave of banks and stores is already a good start. Stores will benefit by moving consumers through their lines quicker.
- They will have learned from the under promotion by Google and will advertise with their launch partners. Their partners have more incentives this time and they have already started.
- Apple Pay is easier to use than a credit card, even though credit cards are also easy to use. However, the recent credit card data hacking events have put the spotlight on privacy and security issues for the the consumer. The Apple Pay system is more secure then credit cards (no paperwork, no data is shared with the vendor, nobody else can use it.) which will be a key educational message that consumers will more easily consider than before.
- Apple will not have access to purchase information and does not store transaction data. They are making this a key differentiator with Google Wallet since Google is not clear what their intentions are in the long term with transaction data.
Many hurdles are still in place that need to be overcome. (The interesting aspect of the Apple Pay launch will be that Google Wallet will benefit significantly as well so maybe Google will need to thank arch rival Apple for taking the plunge). Apple Pay’s success will be based on easy of use and it must be more secure than other options. Early indications are they have succeeded with easy of use, which will only increase when the Apple Watch comes out. Mobile payment will finally become mainstream in the next 3 years and companies need to be ready for it.
UPDATE: October 29, 2014
The Apple Pay launch has been a success with users registering more than 1 million credit cards on Apple Pay in the first 72 hours last week, making it the most widely used contactless payment system available. At the same time, the battle for mobile payment dominance has increased with CVS and Rite Aid deciding to pull their support for Apple Pay. They will support the system from Merchant Customer Exchange called CurrentC which is expect to go live in 2015. They were consistent and also blocked Google Wallet. CurrentC will work very differently and is not expected to be as user friendly as Apple Pay or Google Wallet. In addition, merchants will have access to your shopping data since the data will be stored which Apple Pay will not do. Privacy concerns and easy of use will give the upper hand to Apple and will hurt merchants over time. There will be many stages in this battle that has just began.