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It’s fair to say that Apple knows how to successfully disrupt a sector. Their success with desktop computers has been replicated by changing the way we listen to music, read books and even how we use our phones. Now, with Apple Pay, the company is looking to reinvent online payments. Only time will tell if the entrance of Apple into the mobile payments market will have the same impact seen in other sectors, but it is certainly a key moment for the industry.
However, Apple needs to be very realistic about the market it is moving into. This isn’t simply taking CDs and digitising them or adding a touchscreen to a mobile phone handset. The entire payments industry needs to change for Apple to have the same impact that its other products have had. It is an enormous ask, even for a company like Apple.
What does play into its hands is that in true Apple style, it is entering a market at a time when there is positive momentum anyway. For example, the roll-out of iBeacon technology across the retail sector looks like it is about to ride the crest of a wave. Apple brings to the table a massive customer base through iTunes, as well as the hardware that will compel businesses, stakeholders and consumers to consider NFC technology in new ways.
We are many years on from the first suggestion of NFC technology being widely implemented. Indeed, there’s still huge debate about the usefulness of NFC and whether it will cement its position on the high street. The staying power it has shown is evidence that it is a technology businesses are interested in, even if there is debate about how best to utilise it. With Apple Pay on the iPhone 6 and 6 Plus, NFC has finally been built into the market-leading hardware. It may well be the final nudge needed to get the technology over the line.
An added bonus of this sudden and renewed interest in mobile payments is that it will drive new ideas about processing mobile payments, offering loyalty bonuses and incentives through coupon offers. It may also make merchants realise the valuable data customers will be willingly handing them which can be used to tailor customer offers.
Apple has worked hard to gain the support of major players in the payment industry. Credit and debit cards on the payment networks of Visa, MasterCard and American Express, which represent nearly 83% of the total credit card purchase volume in America, are on board. Having the customer base is all fine and well but without the support of these industry giants, Apple Pay would have lacked credibility.
For small to medium-sized businesses in particular, Apple Pay might remove some of the cost barriers currently associated with NFC and opens up the opportunity to use location-based incentives that will offer extra value to consumers. It is hard to imagine that following generations of smartphones won’t have NFC or similar technology as standard. This will drive down production costs leading to features such as fingerprint authentication becoming available on more devices. This will add additional layers of security with regards to mobile payments. Together with TouchID, Secure Element and the integration of wearable tech, many of these new technologies will become standard features.
What is not yet clear is how and when retailers and banks will decide to start accepting newer methods of payment like Apple Pay. There is a significant cost attached for them to implement change and also educate staff and consumers on how to use new payment methods. However, rather than focus on cost, retailers should see the recent industry developments as an opportunity to review their payments strategies and examine how they can benefit from them.
A new generation of consumers are demanding faster and more convenient payment services. It is a challenge for not only the technology companies, but also payments, banking and retailers to provide innovative solutions. Skrill has been enabling digital payments for more than a decade, developing products to facilitate seamless payments for both merchants and consumers. During this time, we have witnessed many significant developments in the digital payments industry from all players, large and small. With Apple entering the payments arena, we’ll see the principles of ease and convenience further enhanced, encouraging yet further consumer take-up of mobile payments. Whilst Apple has brought mobile payments front of mind for many people, there is still some way to go in the next phase of digital payments.