Industry News

What everyone still doesn’t get about Apple and mobile payments

Yesterday Apple held its much-anticipated iPhone 7 event, and as many expected, the overall theme was evolution rather than revolution, with a switch to wireless headphones and the addition of a second camera among the biggest changes announced.

As with all Apple product rollouts, there was (and for weeks will continue to be) fierce debate over the wiseness and value of each of the changes. But few would dispute the notion that the new features and tweaks are designed not as individual money-makers, but as part of a broader effort to draw more customers into the Apple ecosystem and – perhaps more importantly – make existing Apple users feel that they are getting the best and most seamless consumer technology experience money can buy.

The same goes – or should go – for Apple Pay, which got a small mention at the event, in the form of plans to launch in Japan next month using a local version of NFC.

For whatever reason, two years into the life of Apple’s mobile payment solution there remains a widespread belief that it isn’t comparable to all of the other features which attract people to Apple’s “walled garden” and keep them there. Instead, Apple Pay is seen as just a source of transaction fees – sort of like an App Store without the apps.

Needless to say, the world’s most valuable company didn’t get that way by turning down revenue. But as time goes on it becomes ever more clear that for Apple payments are just another selling point that can help draw in and retain users.

Just consider the firm’s unusually underhyped announcement in June that Apple Pay will support online payments. Utilizing the “continuity” feature, they will allow users to authenticate him/herself with their phone’s fingerprint scanner while shopping on a desktop or laptop by having a payment request automatically forwarded to the handset. The catch, of course, is that the consumer needs to be using both an iPhone and a Mac.

It should also be pointed out that Apple’s most ferocious competitor – Samsung – has openly said that its own eponymous payment service is more about convincing customers to choose their handsets than collecting fees. Likewise for Google, for whom purchase data rather than transaction fees seems to be the raison d’être for Android Pay.

As for what all this means for other firms directly or indirectly involved in mobile payments – which at some point will include virtually all firms of a meaningful size – there are two key takeaways. One is that the biggest names to date in mobile payments are not actively trying to capture all the value being unlocked by these new technologies. Second, the lack of a motive for an immediate financial payoff explains why Apple and its peers have not been so actively pushing mobile payments, which in turn explains why adoption has not been as quick as some earlier projections. Though given the collective yawn which greeted yesterday’s iPhone event, that may soon be about to change.