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Hari Subramanian

Payments changing lives

Hari Subramanian - Wipro

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Why am I not content with Apple Pay?

11 February 2015  |  3712 views  |  3

Enough has been written about how cool Apple Pay is. And it really is a game changer in a world filled with card data breaches and fraud. Apple Pay's support of tokens and biometrics are extremely important features for consumer and payment security. However, I want to point out some key trends in consumer and merchant expectations where Apple Pay may fall short.

In the old days when cash and checks were the only norm, consumers took payment options that were given to them. In today's mobile and social world, that is not the case. Consumers are used to paying online, researching products on mobile, and banking through mobile devices. They know that they could leverage their mobile devices for paying not only merchants but also friends, billers, and others. Many would like to receive offers and coupons in their mobile devices.

Also mobile Internet has become ubiquitous globally. There are coverage issues in rural and developing markets but Wifi and other options provide missing coverage where it is essential (e.g. inside a retail store). Broadband is everywhere in developed countries with developing countries catching up. Falling prices are promoting smartphone adoption globally but feature phones are long from being gone completely.

Given these facts (if not facts, at least widely accepted premises), following are my problems with Apple Pay:

  • I trust my bank. I trust Apple as well but I don't trust my mobile device to the same extent. I could lose it easily. Storing my tokens with my bank in a cloud vault feels much safer for me.
  • It provides a completely different user experience when I pay online vs when I pay at the POS. I would very much like a uniform user experience no matter where I pay.
  • It uses NFC which completely ignores the fact that mobile broadband is ubiquitous in developed countries (at least).
  • It does nothing to reduce POS costs for merchants.
  • At least as of now, Apple Pay does not help me receive all the offers I want while walking the aisles at the retail store. (instore Wifi or BLE networks would let me do that) Also merchants and manufacturers would love a solution that allows them to influence my product choices while I am walking the aisles.
  • I can't pay my friends with Apple Pay. I need totally different P2P apps for that. Even worse, I need to know the intricacies in cost/ delays and choose the right app; not as simple as specifying speed/ cost criteria and getting goods shipped through a courier.

Retailers want an integrated instore coupon distribution and payment network, not one for each purpose. Consumers want payment security and convenience. But they don't want it across multiple apps, devices, and networks where they need to know the intricacies. Can Apple Pay match those needs?

Picture source: mefminute.com TagsMobile & onlinePayments

Comments: (5)

Andrew Churchill
Andrew Churchill - Technology Strategy - London | 12 February, 2015, 13:16

Hari,

You are quite right to highlight the flaws in the use case - lack of P2P, inability to integrate with loyalty schemes, and the myriad different permutations for customer and sales staff (where present). The NFC aspect of the last of these may be more US centric (and we shall see how Samsung cope in a few weeks time), but from here in the UK NFC is now fairly well established.

But as you might note from my blog on the 9th, they are more worryingly introduncing additional security vulnerabilities that are quite unnecessary. Not only has the system failed to solve the above customer focussed aspects, it has singularly failed to address security in a meaningful way. As I put it on the 9th - Mere Tokenism.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 12 February, 2015, 15:57

As a marketer who is working on solutions to deliver targeted offers and coupons on mobile devices, I'm thrilled to read that there are consumers out there who value these things. That said, while launching Apple Pay, Apple categorically said that "when the payment is made with Apple Pay, the cashier won't know the consumer's name or card number." Therefore, it was obvious that Apple Pay wouldn't facilitate coupons etc. While that might’ve impacted merchant adoption, I’m sure that it has actually bolstered consumer adoption of Apple Pay: For every consumer who considers lack of coupon a shortcoming, there must be at least one other consumer who considers that as a virtue and a fulfillment of Apple’s promise not to share any transaction data with the merchant (or itself, for that matter).

Apple has the clout to make standards of its own but, by excluding P2P from Apple Pay, it has chosen to endorse the prevailing best practice of designing mobile apps as lightweight apps without tacking on too many features on to a single app. Maybe a separate P2P app is on the cards. Maybe Apple thinks P2P to be too small a market to bother with. Only time will tell.

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Hari Subramanian
Hari Subramanian - Wipro - Greater New York City | 12 February, 2015, 18:06

Thanks Andrew for your comments. Much appreciated.

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Hari Subramanian
Hari Subramanian - Wipro - Greater New York City | 12 February, 2015, 18:11

Kedar - thanks for your comments. Although Apple Pay may not know about the details of a payment, there are many other ways for Apple to find out about me and my behavior and actually, they know about me quite a lot. For example, when I land at my home airport, they can tell me how much time it would take to reach home depending on current traffic conditions! And I don't have to do anything on my iphone to get this insight.

Majority of consumers just want convenience and security. They don't think about how security is implemented or what data points are collected and stored before they adopt technology or products. Invariably the user experience and the perceived security drives adoption, not detailed less known secrets on how security is implemented.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 13 February, 2015, 13:06

@HariS: TY for your clarification. (1) Regardless of what Apple knows about you, Apple Pay doesn't reveal the identity of the user to merchant, therefore a merchant can't send instore coupons. That was known from Day One, even to a non-FanBoy Android lover like me! (2) From its very launch, Apple has emphasized security and privacy of Apple Pay, so I tend to think that people who may otherwise not care about these things would have given a lot of weightage to these perceived differentiators in this specific instance when they decided to adopt Apple Pay. Whether they understand implementation intricasies or not, they're smart enough to smell a rat if they ever receive an instore targeted offer from a merchant via Apple Pay! (3) In any case, Apple has left it to merchants to implement instore coupons in their own apps, powered by iBeacon - totally outside the core Apple Pay offering.

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Hari's profile

job title CxO Advisor - Banking and Payments
location Greater New York City
member since 2014
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Hari is a management consultant and industry advisor in banking and payments with over 20 years of global experience in Telecom and Banking and Financial Services. He has advised a number of the leade...

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