Apple Payments and the Long Game

Now that pretty every other tech and payments writer has opined on Apple Pay and what it means, I can add my own thoughts with benefit of theirs–and note where I think they’re off the mark.

This post will grow over the next days so check back here or at my website.

To start with, do I think Apple Pay is going to transform the world of mobile payments? A guarded yes to that. Bu nowhere near as much as many think, not in the short term.

Some really smart people have outlines why Apple’s move will win the day: Sean O’Toole (among others) make some excellent points about Apple’s triumph in creating a highly secure payments scheme and including many of the key players in that complex world, something not done before. This gives Apple the support of the incumbents. And Menekse Genscer writes more cogently that anyone I’ve read about the threat Apple Pay poses to PayPal, at least in the United States. Yes, Apple does threaten to eat PayPal’s lunch by elegantly solving the mobile pay problem with itsĀ in-app payment solution.

A lot of this is a bit breathless, influenced by the contrained view of payments people.

The problem with mobile payments has always been providing sufficient incremental value for consumers and merchants to change behavior. Apple is better positioned to do that any other firm I now of. But have they done that with what was announced on the 9th? I don’t think so.

What have they done?

1) They’ve offered the best security available in the market with their tokenization solution. And security concerns have made many reluctant to shop digitally (even though real security issues have not decreased card use to any measurable degree). So making mobile payments very secure removes an impediment to adoption.

2) They’ve simplified the steps to buy with a phone to a single touch, removing a another impediment.

But removing impediments does not makw an affirmative case for changing from something no consumer complains about. No incremental value here.

What about merchants? Even less of a story. Apple have opened secure mobile payments to those who buy the new iPhone, but how many customers will that be? And do merchants really want to change their behavior at point of sale for a fraction of their customers? Hard for me to see that happening.

And where is the incremental benefit for merchants? If this drives transactions from cash, merchants pay for it. And the transition to NFC will require staff training and probably slow checkout for some months while the processed it learned.

No, I don’t see any huge shift in the near term. But I believe Apple is playing a long game, which will over time have huge effect. More on that in a subsequent post.

But for now, let’s take a deep breath, recognize what Apple have, but don’t get caught in the reality distortion field that may be emanate from Cuperinto. The revolution is coming, but it ain’t here yet.





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