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Apple Pay: Considerations for banks and retailers

With the launch of Apple Pay, a question on everyone’s mind is what the impact will be for retailers and banks. For most retailers, especially those in the US, the question is whether they want to start accepting Apple payments and if they do, how this will affect their overall omni-channel strategy. For banks, the question is more around whether to participate with Apple in allowing their cards into the wallet. While an impressive number of the larger banks in the US have made that decision already, there are many still pondering whether or not this is critical for them.

Before anything else, both retailers and banks need to understand what their goals are in implementing any new mobile payment capabilities and this should be a business decision, not a technology decision. Secondly, they should see the current mobile disruption as an opportunity to review their overall omni-channel payments strategies. Retailers in particular would do well to avoid leaping into such a volatile environment without a clear vision –possibly finding themselves deploying a solution that will not meet their needs, only to discover that they require a ‘rip and replace’ down the road as the market evolves. Mobile programs should be implemented as part of a holistic payment strategy - and at the same time the underpinning payment strategy should support the inevitable evolution around mobile payments.

Retailers need to decide when they want to start accepting Apple payments, what they need to change on the POS, how they train their staffs and how they help their customers understand the checkout process (and related processes such as disputes). The really good news is that the payment rails have been left intact. The key change is the acceleration toward NFC (where not supported already) and tokenisation.

Nevertheless, retailers need to also consider how Apple Pay will relate to other mobile wallet plans that they may already have in play (or in planning), and how these integrate with their loyalty schemes, marketing strategy, etc.

For banks, they need to decide how much they want to make of Apple Pay. As with retailers, such a decision should be encompassed within a broader strategy around the omni-channel consumer touch points in general and mobile payments in particular. Allowing their cards to be added as payment sources, and the extent to which they would be seen as ‘deeply integrated’ or ‘preferred’ participants, may play a role in how they are perceived, especially by the large population of loyal Apple consumers. And certainly they need to ensure they have the appropriate agreements with American Express, MasterCard and Visa to support tokenisation. Looking forward, banks should also plan to extend their mobile banking platforms to support new payments options.

For both parties, this is another in a series of events highlighting the need for a robust yet flexible payments platform that can adapt to technology in a way that supports business priorities and timelines. Apple Pay is significant, but don’t forget that globally there are far more mobile phones out there that are not iPhones. And the pace of evolution of mobile payments is not about to slow down. We must recognise that the recent news is but one more disruption in a significantly disrupted industry. And it won’t be the last.

Apple has played a compelling hand. But remember – play your hand in a manner that is true to your own strategy.


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