Could Apple Give Mobile Payments a Shakeup?

4/10/2013

The proliferation of mobile devices is no doubt starting to change the way people interact with payments, and, in turn, is changing the way merchants interact with customers. Tablets, smartphones, and other devices being used in place of traditional payment forms are transforming the way merchants view the market.

Starbucks, www.starbucks.com, for example, has recognized its customer’s mobile lifestyle and offers not one, but two different mobile payment applications, thanks to its partnership with Square. Of course, Square, which offers a device for the smartphone along with a payment app, is just one example of the many types of solutions changing the way payments are accepted today.

As another example, anyone walking the streets of major metropolitan areas like Salt Lake City will likely see a multitude of billboards, trains, and bus wraps promoting Isis, the mobile commerce joint venture from AT&T Mobility, www.att.com, T-Mobile USA, www.t-mobile.com, and Verizon Wireless, www.verizon.com. And, of course, there is the fact analysts like ABI Research, www.abiresearch.com, expect NFC (near field communication)—one of the most promising mobile payment technologies—to be in more than 500 million devices by next year. In addition, Samsung, www.samsung.com, and Visa, www.visa.com, made waves last month with their mobile payments partnership, a major development in what has so far been a very fragmented market.


Even with all of this industry activity, mobile payment still has not been widely adopted by mainstream consumers. This begs the question, what will be the tipping point for mobile payments?

Brad Hintze, CMO of MokiMobility, www.mokimobility.com, a provider of cloud management and security solutions for mobile devices, believes this influx of options is actually part of the problem. “I cannot pick a mobile wallet today and know that everywhere I go that it will be accepted,” says Hintze. “But I can pull my credit card out of my pocket and almost everywhere I go, I can swipe my credit card there.”

In fact, Hintze thinks the industry faces a sort of “chicken and egg” scenario. “The retailers and merchants want to support end users and accept these new forms of payment, but then they also want to wait until there is that demand before they invest too much time and energy into that,” he explains. “On the other side of that, consumers won’t invest too much time and money and energy into setting that up and enabling those mobile wallets until they know they can [use it].”

The Big Apple
Although there are differing opinions about what needs to happen to get mobile payments into the mainstream, Hintze does believe there is one big name in the market that could make all the difference—Apple. “Apple has a tremendous amount of influence when it comes to mobile,” Hintze says. “If and when they make any sort of announcement in that space that will do a lot to convince both the merchants and the consumers, and point them in a direction to enable this.”

Currently, Apple has not committed to any sort of mobile payment scheme. While most of today’s Android phones include NFC technology, Apple has not built the technology into its hardware—at least not yet. Hintze and others are speculating that may change come June, when Apple typically hosts its annual developers conference. “Given that there are these market conditions pushing mobile wallets and mobile payments, we are hoping that we will see something from Apple along those lines early this summer,” Hintze says.

At last year’s conference, Apple announced PassBook, an app that can store airline boarding passes, movie tickets, and gift cards all in one place so that consumers can use to their iPhone or iPod touch to check in for a flight, get into a movie, and redeem a coupon. The question is whether or not Apple will go even further with PassBook, or if it has some other mobile payment development in the works. Hintze thinks either option is possible.

“Apple has a lot of experience in mobile payments,” Hintze notes. “You can go in their store and buy almost anything off their shelves on your phone, walk out, and never even talk to an employee. They understand that model really well, both from a merchant perspective and how to handle and manage customers and educating customers in how you use that technology. If they can take that experience…and make an announcement in the mobile payment space, it will do a lot for the adoption.”

In many ways, Hintze says Apple is already the consumer’s mobile wallet. “Can you think of a single vendor that has the personal information and payment card information for more customers than Apple?” he asks. “Apple has the credit card numbers, addresses, names, and phone numbers of over 400 million different users.”

With access to that amount of data—and the means to secure it—Hintze says it’s only a matter of time before the tech giant uses it for a payment solution that could change the marketplace as we know it. “They know how to get you to use it to pay for apps, pay for music, and pay for movies,” Hintze says. “Now they just need to turn on a couple of features, and they can use that same data to get you to pay for other goods as well.”

Does Apple have the consumer clout the mobile payments industry has been waiting for? Hopefully, the market won’t have to wait until June to find out.

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