POV

Can Apple Pay change the way consumers buy?

Background:

Last week, the world waited with baited breath for the most anticipated tech news in 2014 – the release of the new iPhone. Aside from the technical glitches during broadcast of the keynote speech, three new major products were unveiled. The majority of viewers were predominantly interested in the shiny new look of the iPhone 6 and were pleasantly surprised by the announcement of the Apple Watch. Perhaps the least interesting part of the event was the section on Apply Pay. At face value, it’s not exactly as interesting as the new handsets and given the distraction of a huge projector behind Tim Cook showing off their shiny new toy, it’s easy to see why this announcement took a bit of a backseat.

How it works:

By using the credit card synced to your iTunes account, Apple Pay will allow consumers to make payments in stores through Touch ID. The tech giant has already tied up with American Express, MasterCard and VISA, claiming that 220,000 merchants will be ready to accept this payment method.

How will it affect the competitors? Citi’s Mark May has done some analysis on the impact this will have on established competitors, such as PayPal or eBay. He claims that neither are at risk of losing significant revenues.

So, what does the launch of Apple Pay really mean to the technologically saturated world that we live in?

POV:

Being a natural skeptic, I agree with May for a number of reasons:

  • BEING AN APPLE PRODUCT DOES NOT GUARANTEE SUCCESS
    With anything Apple, the immediate perception is that anything they release will be an instant hit. However, there are at least of couple of products that Apple have launched that failed (Maps and Passbook to begin with), and these were not small mishaps.
  • TOUGH COMPETITION: APPLE VS. GOOGLE
    In this region in particular, Android penetration is incredibly strong, meaning that Apple Pay immediately excludes almost half of the smartphone users in the Middle East (a region with one of the highest penetration rates in the world). So from the outset, Apple may have put a cap on its users.
  • “BUT IS IT SAFE?”
    Data protection has been a hot topic lately, with so many incidents of leaks across the world; this is something that consumers are not taking lightly. While it’s a brave decision to continue with the launch of a product that involves the use of very personal information, Apple is going to have to do a lot to reassure consumers that their personal details will be kept securely and that the product is safe to use. PayPal and eBay have taken a long time to earn the trust of their users, and now Apple will face that same challenge.

Despite things being stacked against them, Apple is still pioneering the way the industry will move forward. By becoming the middle man between banks, retailers and consumers, the company has shown their commitment to making the NFC platform a norm. While Apple Pay may not be a revolutionary product, there is definitely the possibility that if well-received, the NFC payment movement will take a big, bold step forward. And if this is the case, the way consumers and merchants interact will be transformed entirely.