How Apple Pay could kick start mobile wallet

So the iPhone 6, Apple Watch and Apple Pay are now amongst us, but what will this mean for the take up of mobile wallet?

It was clear to many observers that mobile wallet would probably struggle to take off until Apple entered the fray. To use a religious analogy, it feels like they have been surveying the scene (probably not literally) and have now given it their blessing. Hallelujah! It’s OK – you can now trust mobile payments – Apple are doing them!

There are two main reasons why Apple Pay will give mobile wallet the kick start it needs:

  • Apple has a very large, loyal installed base of mobile engaged consumers, the vast majority of whom will have a mobile payments system already set up with Apple via iTunes. Despite the iPhone’s massive sales and broadening of reach over the last few years, these users are still above average in their understanding of and comfort with using technology, shopping online, and all things mobile related – which should include using it as a wallet.
  • The whole mobile wallet sector will benefit from a raising of awareness courtesy of the Apple Marketing Machine, even if they happen to make people think they invented mobile wallet & NFC

It goes without saying that the biggest hurdle to mobile payments is consumer trust, i.e. fear over security, of having ‘everything in my phone’. Self funded research Marketing Sciences conducted amongst smartphone owners earlier this year suggests Apple is the best placed of the tech companies to be a provider of a mobile wallet, although they lag well behind PayPal and some of the other big credit card providers in terms of consumer trust.

MW Trusted brands May 14 chart

Apple has tried to reassure on that in their announcement with Touch ID and Secure Element , hinting that it is even safer than using a traditional debit or credit card, or certainly more private. And of course they have the major credit card companies on board.

However, our research also suggests that people aren’t that excited about mobile payments alone (this makes sense – most systems are too clunky yet – and where’s the benefit?). The real benefit will come when a truly usable wallet arrives and enables you to digitise/mobilise your loyalty cards and vouchers, as well as make payments.

It is the relative lack of financial risk with loyalty cards that will entice people into dumping their physical Nectar, Club & Advantage cards and going mobile. Then, through habituation of use we believe users will gradually start paying for things with their mobile wallet.

So the announcement of the Apple Pay retail partners was for me one of the most interesting aspects of the launch event, and it will be fascinating to see how that develops in terms of quantity of partners and depth of partnership, and of course UK relevant brands.

A final thought on user experience. After we have become aware of mobile wallet, overcome our security fears and retailers have installed sufficient contactless payment terminals (and trained their staff well to promote this form of payment) then it is very much down to the usability folks to make the mobile wallets simple, reliable & easy to use. The user experience aspect may well be the big one where Apple leapfrogs the competition with Apple Pay and Passbook on iOS 8. Expectations are high, as always, as the share price tumble demonstrated.

Now, if they can just make the battery last for a whole day…

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Richard Snoxell
01962 842211
Article date - 10/09/2014
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