With the launch of the Apple Watch on the 24th April and its support for Apple Pay, one question is; “Will customers prefer the Apple Watch over the iPhone 6 for in-store Apple Pay purchasing?”
A survey of iPhone 6 consumers in the US indicates that Apple Pay is not an instinctive action[1] for in-store payments. The survey
shows consumers are trying Apple Pay for in-store payments but a significant number are only using it once. The FED in its ‘Consumers and Mobile Financial Services Report’[2],
published in March, indicates that US mobile consumers are currently happy to access their accounts and pay via their mobile device for remote payments but may not be ready for in-store payments. This finding is confirmed in a report from Staples.com[3]
showing the popularity of Apple Pay in-app remote payments. The Apple Pay in-app payment experience is simpler and is easily used by consumers and retailers.
My belief is that the current iPhone 6 in-store Apple Pay process in the US does not benefit consumers and retailers enough in terms of speed, convenience and security.
Perhaps we should consider whether the Apple Watch will improve the Apple Pay experience in-store for consumers? The payment process in-store is simpler and should be more popular, if consumers remember to sync their Apple Watch for payments each day.
Contactless debit and credit card payments are happening in other markets around the world. We are seeing the fastest rate of adoption in markets where the consumer taps their contactless device and then enters their online PIN[4],
if the retailer requires it. This contactless transaction model works for consumers and potentially it could be adopted by Apple Pay in the US.
The issue is then will the US payments ecosystem change to PIN at POS for all cards? The prize is potentially very large as the expected deployment curve is estimated by Mercator to be 53 million devices in the US by end of 2015[5].
My predictions are that:
- Apple and the card schemes in the US will alter the contactless transaction flows to simplify the user experience and support a more secure provisioning process for issuers[6].
- Apple Pay in-store acceptance will have the fastest adoption curve in contactless markets with online PIN.
- Apple Pay will evolve to integrate iBeacon technology to further simplify the payment experience with the iPhone.
[1] http://thefinanser.co.uk/fsclub/2015/03/does-anyone-really-need-a-mobile-wallet.html
[2] -
http://www.federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201503.pdf
[3] http://appleinsider.com/articles/15/02/17/apple-pay-drives-in-app-purchases-at-staples-fails-to-catch-on-in-stores
[4] http://www.visaeurope.com/media/images/Visa_vysledky2014_ENG-73-21036.jpg
[5] http://www.atmmarketplace.com/news/study-looks-at-apple-pay-prospects-six-months-on/?utm_source=NetWorld%20Alliance&utm_medium=email&utm_campaign=EMNAAMC04242015
[6] http://www.nytimes.com/2015/03/17/business/banks-find-fraud-abounds-in-apple-pay.html?_r=0