Apple Pay problems...
Well, this is a short list. Beholden to Apple products.
I'm sorry, but unless Apple opens up access to 3rd parties it is impossible that this will change payment making forever. Rather, it will probably drive a stake into the heart of phone based payments for a goodly time should it fail.
These sorts of gimmicky payment methodologies cause this to happen because retailers get burned in the long run. It is costly to roll out new PoS machines, train employees, etc... and it only impresses the chain if they can see measurable gains from the investment. Which means, they would need some strong indication that consumers are shopping at their stores rather than their competitors BECAUSE they support Apple Pay. If they fail to see that, then they spent money on something that did them no good and will sour them to future gimmicks.
And this is a gimmick. Apple has less than a quarter of the smartphone market. And only a fraction of those can even use Apple Pay because it requires an iPhone 6 or 6 Plus. Which means that if every iPhone 6/6 Plus user made use of Apple Pay, it would only represent something like 2-5% of all smartphone owners, and lets face it, not every one of those users will use this even when they can. Many of them are children linked to a parents credit card for instance. Many people prefer using money (cash or debit vs. credit). And then there is the fact that how secure this model is in the real world is completely untested. CLAIMING it is more secure than something like Chip + PIN technology is something altogether different than PROVING it.
But, it is the market share problem that will be the deathblow. The supposed security value lies in Apple's TouchID which is a proprietary solution. So, they can't open up Apple Pay unless they also open up TouchID to others. And, frankly, Apple has no history of doing either.
In fact, this is the part I don't get AT ALL. Apple has never made any attempts at universally accessible solutions. Rumours were that Steve Jobs later regretted releasing iTunes on Windows and initially didn't even want an App Store on iOS that would support 3rd party contributions. The 2 most massively successful things the company has ever done are the only things open in any sense and are basically regrets for the corporation. The need to pay for things is a universal problem. Retailers need universal solutions. Or at least a reasonable approximation of a universal solution. So... why is Apple even bothering to make an attempt at this market?
I felt the same about their car tech. The benefit in the auto industry is the feature is only on higher end cars where the manufacturer could probably throw in a compatible iDevice for free with the car purchase just to make sure people don't leave due to platform restrictions.
Basically, out of the 3 big tech companies (Apple, Google and Microsoft) I would rank a payment system like this in terms of viability in this order:
- Google : They take #1 because Android is on enough mobile devices to be considered ubiquitous. Also, Google has at times shown a willingness to partner with 3rd parties.
- Microsoft : They may hold a lower market share, but they are the leader amongst these 3 in providing cross platform solutions. A Microsoft solution would undoubtedly run on iOS, Android and Windows Phone devices and thus support a greater market share than even Google alone. They fall below Google here though, because today they lack the muscle.
- Apple : Dead last due to small overall market share and complete lack of willingness to work on an open solution limiting potential impact and benefit.
Normally, I wouldn't be surprised if a superior product or service went on to dominate the market. But in this case, I would be. It isn't just a matter of iPhone 6 owners buying in. It is also a matter of retailers seeing the value, and that is where brand isn't going to matter as much sales numbers. And I just can't see this making a tangible difference.
And the problems don't end at market share for Apple products. It also ties into the limiting reach of this. As I said above, the challenge for Apple is that it has to get consumers to go to retailers using their tech instead of other retailers. And that is only going to happen if Apple Pay is more than just an alternative to cash, credit and debit. It needs to be a replacement. If I can feasibly walk out of my house without ANY form of payment other than an iPhone 6... it could work.
But, it only matters if I'm not only able to do that... but also likely to do so. I'm not going to one grocery store instead of another just because one takes Apple Pay and the other doesn't if the other is more convenient (distance/pricing/product selection/etc...) if I have another form of payment (like, for instance, the credit card my Apple Pay is linked too) that the more convenient store will accept.
And I'm not taking my credit card out of my wallet... because why the F*** would I? Especially given the limited coverage of Apple Pay (McDonalds, Whole Foods and Walgreens at launch if I read correctly). But, even if the majority of the places I visited accepted Apple Pay... I likely still wouldn't stop carrying my credit card. Or my wallet.
Therein lies the problem. The wallet. Even if every shop on the planet took Apple Pay... I'd still need to take a wallet with me. I need a drivers license to drive or potentially to buy alcohol or cigarettes. I may need membership cards or coupons. Since Apple Pay doesn't address these concerns, people are still going to need their wallets. And, as long as I need my wallet I (like I assume most) will be keeping my alternative payment methods on me.
And since Apple Pay isn't ubiquitous, even for the people who might consider removing a CC from a wallet, they can't. Which means no valuable incentive to the end user to favour Apple Pay over traditional payments methods.
What makes a payment method successful in today's market are 2 things, universality and being forced upon people. For instance, I only have Chip + PIN because my credit card company won't issue cards without them anymore, and at places where it is accepted, if your card has a chip you MUST pay that way. I almost never use Speed Pass and never would have opted to use Chip + PIN. Both are more secure than not using them which is really the only selling feature Apple Pay has.
I'm sorry, but unless Apple opens up access to 3rd parties it is impossible that this will change payment making forever. Rather, it will probably drive a stake into the heart of phone based payments for a goodly time should it fail.
These sorts of gimmicky payment methodologies cause this to happen because retailers get burned in the long run. It is costly to roll out new PoS machines, train employees, etc... and it only impresses the chain if they can see measurable gains from the investment. Which means, they would need some strong indication that consumers are shopping at their stores rather than their competitors BECAUSE they support Apple Pay. If they fail to see that, then they spent money on something that did them no good and will sour them to future gimmicks.
And this is a gimmick. Apple has less than a quarter of the smartphone market. And only a fraction of those can even use Apple Pay because it requires an iPhone 6 or 6 Plus. Which means that if every iPhone 6/6 Plus user made use of Apple Pay, it would only represent something like 2-5% of all smartphone owners, and lets face it, not every one of those users will use this even when they can. Many of them are children linked to a parents credit card for instance. Many people prefer using money (cash or debit vs. credit). And then there is the fact that how secure this model is in the real world is completely untested. CLAIMING it is more secure than something like Chip + PIN technology is something altogether different than PROVING it.
But, it is the market share problem that will be the deathblow. The supposed security value lies in Apple's TouchID which is a proprietary solution. So, they can't open up Apple Pay unless they also open up TouchID to others. And, frankly, Apple has no history of doing either.
In fact, this is the part I don't get AT ALL. Apple has never made any attempts at universally accessible solutions. Rumours were that Steve Jobs later regretted releasing iTunes on Windows and initially didn't even want an App Store on iOS that would support 3rd party contributions. The 2 most massively successful things the company has ever done are the only things open in any sense and are basically regrets for the corporation. The need to pay for things is a universal problem. Retailers need universal solutions. Or at least a reasonable approximation of a universal solution. So... why is Apple even bothering to make an attempt at this market?
I felt the same about their car tech. The benefit in the auto industry is the feature is only on higher end cars where the manufacturer could probably throw in a compatible iDevice for free with the car purchase just to make sure people don't leave due to platform restrictions.
Basically, out of the 3 big tech companies (Apple, Google and Microsoft) I would rank a payment system like this in terms of viability in this order:
- Google : They take #1 because Android is on enough mobile devices to be considered ubiquitous. Also, Google has at times shown a willingness to partner with 3rd parties.
- Microsoft : They may hold a lower market share, but they are the leader amongst these 3 in providing cross platform solutions. A Microsoft solution would undoubtedly run on iOS, Android and Windows Phone devices and thus support a greater market share than even Google alone. They fall below Google here though, because today they lack the muscle.
- Apple : Dead last due to small overall market share and complete lack of willingness to work on an open solution limiting potential impact and benefit.
Normally, I wouldn't be surprised if a superior product or service went on to dominate the market. But in this case, I would be. It isn't just a matter of iPhone 6 owners buying in. It is also a matter of retailers seeing the value, and that is where brand isn't going to matter as much sales numbers. And I just can't see this making a tangible difference.
And the problems don't end at market share for Apple products. It also ties into the limiting reach of this. As I said above, the challenge for Apple is that it has to get consumers to go to retailers using their tech instead of other retailers. And that is only going to happen if Apple Pay is more than just an alternative to cash, credit and debit. It needs to be a replacement. If I can feasibly walk out of my house without ANY form of payment other than an iPhone 6... it could work.
But, it only matters if I'm not only able to do that... but also likely to do so. I'm not going to one grocery store instead of another just because one takes Apple Pay and the other doesn't if the other is more convenient (distance/pricing/product selection/etc...) if I have another form of payment (like, for instance, the credit card my Apple Pay is linked too) that the more convenient store will accept.
And I'm not taking my credit card out of my wallet... because why the F*** would I? Especially given the limited coverage of Apple Pay (McDonalds, Whole Foods and Walgreens at launch if I read correctly). But, even if the majority of the places I visited accepted Apple Pay... I likely still wouldn't stop carrying my credit card. Or my wallet.
Therein lies the problem. The wallet. Even if every shop on the planet took Apple Pay... I'd still need to take a wallet with me. I need a drivers license to drive or potentially to buy alcohol or cigarettes. I may need membership cards or coupons. Since Apple Pay doesn't address these concerns, people are still going to need their wallets. And, as long as I need my wallet I (like I assume most) will be keeping my alternative payment methods on me.
And since Apple Pay isn't ubiquitous, even for the people who might consider removing a CC from a wallet, they can't. Which means no valuable incentive to the end user to favour Apple Pay over traditional payments methods.
What makes a payment method successful in today's market are 2 things, universality and being forced upon people. For instance, I only have Chip + PIN because my credit card company won't issue cards without them anymore, and at places where it is accepted, if your card has a chip you MUST pay that way. I almost never use Speed Pass and never would have opted to use Chip + PIN. Both are more secure than not using them which is really the only selling feature Apple Pay has.
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