Why should Apple be interested in online and mobile payments of all of its goods and services? This can be answered with what data reveals: as of today, the company created in Cupertino counts 800 million iTunes accounts, each one connected to payment card information.
Considering the fact that the total number of accounts in 2013 was about 575 million dollars, the growth trajectory puts this at over one billion profiles by the beginning of 2015. It is much more than Amazon and PayPal can reach over the same time period. So, it becomes obvious that Apple’s intentions are to seize the opportunities this provides for e-commerce. But when?
Although the company founded by Steve Jobs has still not officially announced a platform for mobile payments, it has worked over the past few years on building the individual pieces that now only need to be put together. EasyPay, for example, allows owners of iPhones, iPads, and iPod touch (with iOS 6.0 operating system) to make acquisitions within the Apple Store. The EasyPay app allows bar codes to be scanned and to complete the transaction by pushing a ‘Pay Now’ button linked to an iTunes account. As well, a value proposition linked to the world of electronic/digital commerce could give a push (thanks to the data collected about the acquisition habits of clients) to Advertising mobile (iAD) launched by Apple in 2010, though it is still has a long way to go to reach its main competitors: Google and Facebook.
Recently, developments by Apple for mobile payments have included Touch ID in iPhone 5S and iBeacon in the iOS 7 operating system. Touch ID, for now, is used to lock/unlock iPhone 5S, but can also be used for authorizing payments on iTunes, iBooks, and Apple Store. In a not very far off future, the technology could be used as a phase in the authentication process for a much broader mobile commerce platform.
iBeacon on iOS 7 has, on the other hand, enormous potential for supporting a series of applications and geolocation that would allow for customized promotional offers made in real time for clients. The iBeacon applications use low energy Bluetooth technology (BLE) that is already present within smartphones for communicating in proximity of other BLE located nearby. Notwithstanding the fact that apps that use this technology have only just debuted, it is easy to foresee how they could soon become the ideal solution for implementing and improving functions for Apple Passbook: the virtual wallet that is already present on iPhones for collecting coupons, business cards, receipts, loyalty cards, and much more. As well, the scanning of QR codes, geolocalized advisories, and other personalized options are already possible.
The absence of NFC on iPhones has solicited a lot of discussions. This “shortcoming”, however, does not necessarily mean that Apple is against NFC on principle. If PayPal’s approach to technology has can be considered Agnostic, then Apple’s approach should be considered pragmatic. It seems that Apple has actually already requested a copyright for cloud NFC (HCE – Host Card Emulator), a solution considered by many sector experts as the simplest and most efficient for developers and other third parties.
HCE has recently received endorsement from Visa and MasterCard, an important factor for Apple given that the majority of its iTunes accounts are linked to card payments that pass through these circuits. If, until now, NFC has not taken off, according to experts, this is due to a vicious circle that has been created between retailers and consumers: the first ones have not ensured a wide acceptance network because of high costs for making infrastructures available, and the second ones have not shown particular interest in the service because of a lack of smooth and fast user experience. Apple, if it does decide to implement NFC, has all of the cards in hand to help out the consumer side. Its philosophy that awards usability and the willingness to guarantee services that are always “user friendly” would definitely set the market standards that others would then be forced to follow. Just as it happened with the release of iPhones on the market. Without considering that, whenever Apple decide to use NFC this would receive a notable push in terms of publicity and positive communications about the value and advantages of the service that, as of today, are still not very clear for consumers but that Apple, the queen of marketing and communication, would not miss out on.
The indiscretion, therefore, that Apple has set up an update of its EasyPay POS within Apple Stores, making them compatible with NFC payment systems, would be very positive news for the ecosystem of mobile/digital payments. And this rumor may not be totally unfounded given that iBeacon and NFC have not excluded each other, but rather reinforce each other and are complimentary: the first one ensures geolocalization, thus precision and personalization, while NFC ensures speed and practicality.
Therefore, in response to the question, when will Apple decide to effectively become a protagonist in the world of mobile payments, the answer can only be one: when it is 100% convinced of having the right product for the market. Apple, in other words, is waiting to be able to play its “disruptive” card in order to win. The idea is that of repeating what happened with the music industry and then with smartphones: creating a proprietary and vertically integrated ecosystem within which third parties can move from (and depend on) one great center (Apple). The goal is ambitious but experts have no doubts about Apple’s success, already being a very attractive brand for consumers who have already placed their trust in the company by making online payments through iTunes accounts. Once launched, consumers will adopt it immediately and, thus, banks and retailers will be forced to adapt to the competition.