Unless you live under a rock, you are likely aware that Apple announced its new line of products on September 9. While there weren’t any huge surprises, the general reaction to the news of their new iPhone 6, 6 Plus and Apple Watch was positive.
The punch line for the phones was that they got bigger (significantly so in the case of the 6 Plus), slimmer and faster. The biggest news for marketers, however, was the inclusion of an NFC (near-field communication) technology in the phones and subsequently, a new mobile payments service called Apple Pay.
It may be obvious to some of you why Apple’s new mobile payments service is important; but for those of you who haven’t yet considered all the possibilities, this post will highlight some of the avenues this opens up for marketers.
NFC FTW
For about three years now, Apple has been threatening to include NFC in the next iPhone. For a variety of reasons, this hasn’t happened. Obviously the earth hasn’t stopped orbiting the sun as a result, but it has definitely retarded the evolution of mobile payments.
A few companies like Starbucks (in 2013, the Wall Street Journal reports, 10% of its sales came via its mobile app) succeeded in spite of the lack of this technology, but many companies have yet to move the needle. Some may recall Google pushing NFC-enabled features for Google Places, in partnership with MasterCard, Citibank and VeriFone in 2011, but, despite such high-powered backers, the technology has made little to no progress in the last few years.
So why is Apple’s announcement of the inclusion of NFC technology and Apple Pay such a big deal?
Well for one, Apple is one of the few companies in the world that can affect a significant change with major retailers. It manages one of the two largest mobile platforms and device makers in the world (Android and a variety of manufacturers like Samsung are the biggest).
And while the largest terrestrial retailer in the world, Walmart, along with electronics giant, BestBuy, have stated that they will not initially be accepting ApplePay, many others will.
To me, the indicator that this is the future of mobile payments is the fact that the three largest global payments leaders — MasterCard (a client of my company), Visa and American Express — have all signed up to support Apple Pay. Also of note is that China’s UnionPay has signed on, which gives the service additional global credibility.
Apple has a long tradition of introducing breakthrough products with features that really matter to people. Apple Pay, combined with MasterCard’s payments technology, gives consumers an easy, secure and private way to shop. We’re thrilled that MasterCard cardholders will soon be able to make payments from their iPhone 6, 6 Plus and Apple Watch. MasterCard Chief Payments Officer Ed McLaughlin
Why Apple Pay? Why Now?
Similar to the fragmented digital music space in the early 2000’s before Apple co-founder Steve Jobs brought all the major labels to the table, the mobile payments space has been similarly fragmented.
From home-grown solutions like Walmart’s MCX to Square to Google Wallet, no company has been able to offer up a truly universal solution — think digital version of a credit card — that most retailers accept.
With the combination of Apple’s existing iTunes infrastructure which, according to Apple CEO Tim Cook, boasts 800 million users; the backing of the three major credit card payment leaders; and now, one of the largest mobile device providers in the world; you finally have the perfect ingredients to drive change in the point-of-sale (POS) systems for the world’s leading retailers.
The other key is that Apple Pay will not require an app. This is critical because, as I’ve alluded to in prior posts, it takes a lot to get customers to download an app. It takes even more sizzle/value to get customers to use an app regularly.
Leveraging iOS 8 and the NFC antenna in the new iPhone 6 and 6 Plus, once users scan (or type) their credit card info into Apple Pay, it’s ready to go. To pay, a user simply points their phone at the NFC-enabled POS and clicks the home button on their phone (online, it’s possible to click on an Apple Pay “pay now” button).
Not only does this add an increased level of security, but it also provides a greater level of convenience (we always have our phones with us even when we forget our wallets/purses).
Why Should Marketers Care?
There are five reasons marketers should care about the new iPhone, iOS and Apple Pay. Some of these might be obvious; some less so:
More Access To Customers — this is not your father’s credit card. As Starbucks and Walmart have figured out, when you give customers a reason to download your app and use it regularly, you can have more regular communications with them. In this case, there is no need for an app, however; Apple Pay can be embedded into an app. Give your customers some compelling reasons to download, in addition to the ease of use of Apple Pay, and you’ve got a winning combo.
Seamless Offline & Online — like Walmart with its Savings Catcher, you can now combine an offline and online experience (NFC or “pay now”).
Gamification — one of the promises location-based marketing held was an ability to gamify shopping. Shop Kick came close to pulling this off but was never able to get over the hump. With NFC, however, it’s easy to move beyond just payments to interaction with shelves, packaging and other devices (see my post on iOS 7).
Security — while marketers aren’t personally responsible for security, they are on the hook when there is a security breach. Just ask Home Depot or Target.
Data — with new applications/technologies come new abilities to capture data. We don’t know exactly what this looks like yet; but I can assure you, it will be rich and useful.
Any Downside?
It’s hard to imagine that there would be any downside to a new device, operating system and payment platform which all point to frictionless and more secure payments.
Realistically, there aren’t many; but one of my Millennial colleagues, Beck Olp, brought up a point that is worth noting. Her concern is actually bigger than just Apple Pay and speaks to giving companies access to our biometric information.
During our conversation, Beck confided, “my primary fear with using a biometric, like my fingerprint, is the idea that it’s irreplaceable. In just the last six months, I’ve had my debit card replaced by Bank of America three times due to stolen data. While I’ve still been in possession of the card, my bank account was vulnerable. I think my fear stems from the notion that I will only ever have one set of fingerprints.”
This may or may not be a concern, but it’s something worth considering.
Conclusion
By the time you read this post, the new iPhone 6 and 6 Plus will have hit the shelves. It will still be a week or two before you can use Apple Pay, but it will be here before you know it.
The watch won’t come out until early 2015, but that will open up a whole other host of possibilities. Are you excited?
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