In the UK we have had contactless card payment available for several years and we are more or less comfortable with it, in fact the limit has now risen to £30 this September. Has this paved the way for Apple Pay, paying via your mobile, otherwise known as “Your Wallet, without the wallet”? Is it just the next inevitable step in our changing shopping experience? We asked two of our technology and retail experts for their opinion.
Richard Snoxell – Research Director, Technology & Digital
In-app vs. in-store
The biggest impact that Apple Pay will have is not as a physical payment mechanism on device in a bricks and mortar store, but as an app that enables quick payment when buying online. This is because it removes the need to log in to your account at each retailer (and remember that password!). Sign up to Apple Pay on your iPhone or iPad and input your card details, then go to any website or app that supports Apple Pay, click the button, and you’ve made a purchase. Apple knows whom to charge because of the particular iPhone used. Card details are tied to the Apple device, much the same way card numbers are linked to iTunes and App Store accounts.
It will be a user’s frequent in-app use that will build trust in Apple Pay. Apple is currently trusted by 1 in 5 smartphone users to provide a mobile wallet, behind PayPal, Visa, MasterCard and ‘my own bank’ but nevertheless a good base to build from. This figure will rise over the coming years as the positive user experience and sheer convenience of Apple Pay makes an impact.
And in terms of its physical use in store (or on the Tube or London buses), I and many other observers believe that the Apple Watch is a more convenient and ‘natural’ payment delivery mechanism than the iPhone – perhaps though once the ‘show off’ factor has subsided..! 18-24s were warmest to this notion in a survey we ran in June 2015.
Abandoned baskets – a thing of the past?
Apple Pay’s super convenient, easy to use in-app user experience should also have a positive effect on the issue of abandoned baskets, which is more prevalent on smartphones than laptops/desktops.
When you use a plastic payment card to buy from a retailer either in store or online your card details are transferred to that retailer during every transaction. Apple Pay on the other hand does not transfer your card details, instead it generates a unique 19 digit code for each transaction (known as a ‘token’). This is important because it is the retailers’ IT systems which have historically been breached much more often than banks or the Apple or Googles of this world. Additionally, the on device security on the iPhone 6 takes the form of a biometric fingerprint sensor rather than a PIN.
So on both fronts Apple Pay is much more secure than using a payment card.
Amy Nichols – Research Director, Retail
Shopping used to be a simple, easy process. Customers would go to a shop. Customers would choose their items. Customers would pay for their items at the till. Customers would leave the store.
But we know that shopping isn’t that simple anymore. Customers expect more. Customers are getting more. Customers are now taking shopping to a whole new level and using many different channels to browse, research, purchase, service and feedback on their purchases. Apple Pay is just one more step in the never-ending omni-channel direction that allows customers to shop in a way that is convenient to them.
For retailers, it’s the smart ones which are jumping on board with this revolution in how shoppers use technology on the shop floor. The strongest brands are the ones which are facilitating customers to be continuously connected, rather than hindering it. The retailers which allow mobile payments into their financial processes will be the ones that will retain their customer interest over time and into the future. Retailers have a key role to play in the development of technology such as mobile payments. Apple Pay is doing wonders at raising the awareness of the concept of a mobile wallet and this will also have a knock on effect on other providers too, such as Google Wallet. But until shoppers have more and more places to use the technology, growth will be stunted. As some of the major retailers do get on board, we’ll see a massive explosion in mobile payment volume.
In a world with more and more options for purchasing, mobile wallet can only be a good thing for physical stores.
STOP PRESS: Click here to register for Richard’s free webinar ‘Apple Pay & mobile wallet: the Future of Payments?’ – 2pm, Thurs 1st October. Richard will cover:
- Key features that will drive consumer appeal for mobile wallets (as well as concerns)
- Which brands UK consumers would trust as providers of a wallet app
- The appeal of the smartwatch for mobile payments