By now we’ve all seen the iPhone 6 release, and while there have been a few surprises (alleged bending and software issues), I believe there is still an untold story here, and it’s not about the hardware or iOS 8, but about Apple Pay.
How significant can Apple’s mobile wallet be? After all, there have been several other attempts, including Google’s, Samsung’s, and the hastily rebranded Isis Wallet™, now named Softcard™, none of which have really captured the public consciousness. I believe that Apple Pay’s focus on retail can make all the difference.
All about ecosystems
Apple’s strength lies in its highly integrated ecosystems. With recent figures like $4.5 billion quarterly revenue for iTunes and over 800 million credit cards on file, Apple has a customer base that’s clearly happy to spend money. The other part of the Apple Pay equation is the iPhone’s TouchID fingerprint reader embedded in the Home button.
Apple Pay brings a highly integrated mobile wallet to the mass market, offering an easy way to make payments through NFC and to authenticate with the touch of a button.
This is a continuation of Apple’s strategy of building excellent iterative devices that continue to sell out immediately, and using ecosystems to continue to generate revenue long after the device has been paid for. While hardware manufacturers such as Samsung and HTC are paid when the customer buys the phone, Apple continues to earn revenue every time a purchase is made through its ecosystems, and this continues even when the phone itself is passed on to another user.
Indoor navigation, payments and mobile Big Data
When the iPhone 5S launched, the big story was the M7 motion co-processor that continually measures the phone’s motion while drawing very little power, and which has been updated in the iPhone 6. With access to all of the phone’s location and movement services, it’s able to triangulate location rapidly and efficiently; and now with Apple Pay, it could be a real game-changer.
Can Apple really do it?
Instead of differentiating themselves by including radically new technologies to create features that are rarely used once the novelty value has worn off, Apple prefers to take an existing technology and make it work in a more useful way. Outside the early adopter technology world, incremental evolutionary change is a very effective way to convince mass-market consumers to use device features. This seems to be what Apple is now doing with NFC payments: taking a technology that has been around for a while and integrating it into its ecosystem to provide a great customer experience.
The motion co-processor currently works with sports and activity tracker apps, but the really interesting part of the technology is its application for indoor navigation via Bluetooth Beacons. These are small Bluetooth devices that can be placed anywhere, and which can pinpoint a user’s location by triangulating between them and the user’s device for very low cost.
Shops, sports arenas, museums, even public transport systems can gain accurate location of the customers and users by placing a few beacons. Apple Pay will allow users to scan items and pay for them automatically without having to enter any codes, numbers, passwords or queue for checkout, and without compromising security. If you combine these capabilities, it looks like a re-imagining of the retail experience: navigation direct to what you want; and easy payment when you get there.
A phone that knows where you are, can direct you to where you want to go and which provides a secure, authenticated purchasing capability? This will be a game-changer, without even considering where Apple Watch can take this.
I believe that Apple Pay is the untold story of Apple’s latest round of products; and that this is the start of a revolution in payment and retail. It is still early days and more uses and functionality will be revealed as Apple Pay matures and new devices such as the Apple Watch change our behaviours. I cannot wait to see where it takes us. Many have previously tried to enter this segment and if anyone can bring it all together and deliver a secure, fast, easy and good user experience, it’s Apple.
