27 August 2014

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Mark Carter - Skrill

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Apple gate-crashing digital payments is a good thing

01 April 2014  |  2971 views  |  1

It’s fair to say that Apple knows a thing or two about disrupting a sector. Portable music players, mobile phones, tablet computing…its track record in fundamentally changing how we use and consume hardware and software is well established.

iBeacon, a Bluetooth-based communications and micro-location system whose underlying technology was incorporated into iOS7 when it was released last year, could be Apple’s next major disruptive release.

Clearly, all Apple news and speculation is greeted with a good deal of hyperbole but given that the company already owns one of the world’s largest databases of stored payment details and customer data (iTunes), if it links this to location based data via its iBeacons, it could literally change the face of payments as we know it.

How so? Consider what iBeacon actually does. Put simply, an iBeacon can determine a person’s location relative to a device (notionally, an iPhone). This information can be used to push relevant information to that person depending on where they are and what they are doing.  Not only that, by using Bluetooth low energy (BLE), data can be swapped with devices that don’t need to be taken out of pockets or bags. This opens up a ton of possibilities for automatic digital payments whose uptake to date has stuttered due to a user still needing to make some form of physical gesture, raising the question “why don’t I just use my card or cash?”

Of course, Apple has already begun to disintermediate payments providers people with an iTunes account hardly realise they are buying content using their credit card stored in iTunes but in one stroke, iBeacon cloud make NFC look completely out-dated with locational awareness and authorisation enough to conduct a transaction.

One issue that may prove a stumbling block though is trust. Apple is not- as yet- seen as a proper ‘payments’ company and consumers may need some reassurance before trusting iBeacon to handle a significant amount of their money, above and beyond small item payments such as songs or apps.

However, recent research from Scratch, a Viacom business shows that one third of ‘millennials’ (those born between 1981 and 2000) think that in five years’ time banks will be superseded by tech firms when it comes to who they use to manage their money, so perhaps the issue around being seen as a trusted payments company is a moot point?

Apple’s arrival into the physical location payments space would certainly be interesting. Our work in designing and deploying technology to improve the customer experience and simplify money management on the move can only be enhanced by another vendor shifting consumer transaction habits from physical payment methods to digital.

We are on the cusp of significant disruption in financial services, driven by the business and reputational woes suffered by the traditional banking and payments sector and their relatively slow up take of new technologies. The industry generally welcomes new thinking from all players, large and small, and if Apple does enter the arena, we’ll see the principles of ease, security and convenience further enhanced thereby encouraging significant consumer take-up of mobile payments.

And we can all benefit from that.

TagsMobile & onlinePayments

Comments: (1)

Jeanne Capachin - Capachin Research - Norfolk MA | 04 April, 2014, 12:36

I'm excited to see what happens when Apple does come to the party in a big way. In my travels I spoke with a vendor about phones and security, and I heard a great statistic from a proof of concept. When US consumers make POS transactions, more than 90% of the time they have their phone with them. This POC was looking at using the phone's geo-location and identity data as an additional fraud check, but it's a small leap (maybe just a hop?) to using the phone to initiate payments.

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Mark Carter

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VP Mobile

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Skrill

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