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Why Apple Pay will win (Part 2)

On Friday, I said that Apple Pay would be the mobile wallet of choice and here’s why, but it was a half-finished blog as it really just outlined the ecosystem and endorsements Apple Pay was receiving, rather than the vision of where it is or could be going.  That’s why a few people tweeted to me that it wasn’t actually anything that new.  That’s almost a case I agree with as, when I present at conferences, I always say that Apple Pay isn’t that interesting.  It’s just a wrap around the system, and doesn’t replace anything, but it is an important wrap as Apple doesn’t do anything by halves.

First, the Apple Pay wallet starts with almost a billion people already with an account.   That’s the iTunes base.  There are over 885 million iTunes accounts in play right now , increasing by around 100 million accounts every six months.  That’s a good start.

Second, it’s Apple.  Apple have this way of taking stuff that’s out there that doesn’t work well and making it brilliant.  That’s what they did with the MP3 Player and remember that when the iPhone launched, everyone thought that Nokia was unassailable.  Nokia’s brand was worth more than Google or Apple’s in 2009.  Today, they’re dead and Apple is viewed as unassailable.  They’re not, but they’re surely in a strong position of strength, and Apple Pay with the iPhone and iTunes wallet could become the dominant player.

Third, Apple has not just got the iPhone and iTunes wallet combination, but the additional features of TouchID and PIN for secure entry and access.   Add to that SIM recognition and geolocation tracking, with telephone lock if lost, and you have a pretty secure device.

Fourth, it’s incorporated NFC so you have a true wallet.  Integrated NFC, TouchID, geolocation and more, all wrapped up in an iTunes account I already have.  That’s a great start.

Finally, and most important of all, is that we’ve been waiting for a mobile wallet.  There have been many attempts already, but none have succeeded because they’ve been missing a reason to use.  A reason and incentive to use a wallet are the key factors.  Now, the reason I’d use the Apple Pay wallet is if it displaced the need for me to register my card or prepay details in other apps.  Why do I have to load payment information in Starbucks app and then again in the Uber app and then again in the eBay app and then again in the Airbnb app and then again in … you get the idea.  We need one app to unite them all, and I think Apple Pay is that app.  Apple Pay aggregates the payments piece for all apps.  That’s the dream and companies like Stripe are enabling that dream through their APIs.

These five factors are all important ones in Apple’s favour, and we’ve had a lot of people gunning for mobile wallets and no one has taken that space yet.  So here’s the long-term vision of where we’re going.

Apple develops the mobile wallet of choice.  The mobile wallet is tied to the smartphone until around 2018, at which point it’s crossed over to a watch.  The watch uses the heartbeat as the authentication factor, rather than the fingerprint.  It’s also factored in voice recognition biometrics and more.  Therefore, as you walk around and see stuff, you just say yes or no to purchase.  The wallet is live on your wrist and you continually see balances, affordability, purchase history and location.  The actual purchase pattern is invisible and non-intrusive.  You just breathe and say yes or no.

We then move a past this and Apple Pay is part of your life as you walk around, as a watch or a phone, but it’s also in the cloud and around you as you connect with things.  So you don’t need to get out of the car to refuel.  Your Apple Pay cloud just pays for you, and you confirm the amount by just breathing yes.

Your television pre-orders the movies and series you like and you just watch them.  If you don’t fancy that particular program, the order can be cancelled and funds are automatically reimbursed to you.  In other words, you don’t even think about it, but can see everything aggregated in one when you need to.

But here’s the real killer thing about Apple Pay downstream.  If it succeeds in being the wallet of choice, and all consumers start to switch to the mobile wallet with NFC rather than the card with swipe or PIN … could Apple then launch it’s own payment mechanism.

The Apple Pay wallet system, with its own bank partner (if it needs one) and now you don’t need a card registered or anything.  You don’t need PayPal or Visa or MasterCard.  You just need Apple.

Just a thought.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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  • 1) Apple at best is an alternative to Plastic
    2) Visa / Mastercard / Amex are not just brands – they Clear and Settle Transactions in $Billions across the Globe
    3) Apple will not get into Merchant Processing Business simply because there is no money in there
    4) Apple Pay process would work in the US but will have to move Heaven and Earth to make it possible elsewhere (read US as Developed countries)
    5) Why would apple ever want to become a Financial Services entity?
    6) NFC already shifts fraud liability to the Banks
    7) All Apple would do is possibly provide a authentication feature (Touch ID) (best so far – only time in the market will prove)
    8) Importantly Touch ID is just one of those features. (Smart people at Apple know that 99.99% population across the globe do not understand how Electronic payment network work). So they used the launch event to hype the usability of the new iPhone!