The Stars Align for Apple and Mobile Commerce

Apple is getting closer to offering mobile payments. A lot closer, though in Apple time that could still be a year or more.

I’m not thinking about NFC in the iPhone.  That had been speculated with each of the last couple of iPhone launches, yet never happened, suggesting Apple made a correct call on NFC that Google Wallet and ISIS didn’t.  And this isn’t just because of a new Apple patent related to payments—in this day and age patents are filed defensively, whether or not any business plans relate to the filing. And Apple has filed many patents related to payments.

No, my thinking comes form watching Apple for a long time and seeing how they work, combined recent actions they’ve taken and changes in the business landscape.

Let’s start with Apple.  They don’t do things in a hurry, and they don’t take on much at one time (check their new advertisements, with the line “…We spend a lot of time on a few great things…”).  Would you say anything you’ve seen to date in mobile payments could be called great in the way a good Apple product can be?  So whatever Apple does in mobile payments will be something different—echoing earlier Apple ads.

I’d argued at one time that Apple wouldn’t get into payments since is it such a low margin business, until I realized payment wouldn’t be the point—it would be a way to sell more of their hardware.  After all, what Apple has always offered is an integrated experience, hardware and software engineered to work beautifully together.  In Apple’s early days this was at times a problem, but with their re-birth when Job re-joined it has been a huge asset—think iPod and iTunes, iPhone and App Store.  Both expanded categories that had existed before (MP3 players, multi-function phones) by creating a better experience.

Now look at the pieces Apple has to work with.  They have multiple payment-related patents, sure, as mentioned before. Better than those are their lightweight forays in commerce on a mobile device.  In an Apple Store you can use an app make an appointment, find a product, and pay for it, all from you mobile device. And there is Passbook, with which they’ve take a lesson from the App Store and let third parties build for their platform, giving Apple great insights into usage, what works, and what doesn’t.   And we just learned that Passbook is getting QR code scanning capabilities with iOS 7—but capabilities that only work with Passbook-enabled codes—check this  TechCrunch story for an interesting take.

And there’s more.  The new version of OSX will allow Keychain to store and auto-fill credit card data, on any Apple device.  The new iOS provides an encrypted way to transfer data – via Wifi/Bluetooth—from one iOS device to another:  AirDrop, and a related proximity version of BlueTooth called iBeacons, which would appear to allow proximity payments without NFC hardware.  Accounts?   They now have 575 [2014 note: make that 800] million iTunes accounts, meaning pretty much that same number of credit cards. And oh, remember that fingerprint recognition company Apple bought last summer?

Those pieces can be assembled in many different ways; it would take more than another post to work through them all. But you can be sure Apple is working hard on finding the easiest and most elegant way to make use of them.

Commerce requires merchants, and Apple can’t be the only one.  Apple has some key advantages in getting merchants on board, though.  As Karen Webster pointed out recently, iPhone users spend a lot—30% more than Android users—and are wealthier, something that would appeal to merchants. [2014 comment:  think of their recent hires from retail]. And since Apple is all about selling their devices, not advertising or analytics, merchants would be more inclined to trust then than payment networks, banks, or Google.  And speaking of trust, Apple regularly ranks as a highly trusted brand.  After all, you’ve given them your credit card information.

And then there is the environment. We all know what’s happened to Apple stock price recently, and what the quarterly-result analysts watch.  Imagine some combination of the pieces I’ve mentioned rolled into a new OS, say around the same time as a new device, say, an iWatch, launches.  Using some of their many patents and all of their design ability, you could have devices that make it easy to research, shop, and pay for things, all from a mobile device.  That could help sell a lot of devices.




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