Integrated Payments and Why Apple Pay Isn't the Be-All and End-All
We're hearing a lot about Apple Pay and other mobile device-enabled payment systems. While mobile capability is one facet of the solution, Apple Pay is simply piggybacking on existing card infrastructure rather than providing something that transcends it. Furthermore, merchants that offer Apple Pay are just layering another card-like payment option on top of what they've already been accepting.
NFC-based Apple Pay is primarily a technology developed for in-store payments. It works online too, but again, it's simply competing with plastic, which, for what it does, works very well. Its patchwork solution lacks the type of integration and, more importantly, the wow factor for the consumer that would make mobile payments irresistible.
Along these lines, I've recently been thinking about how important payments are to the overall retail picture, including e-commerce, m-commerce and good old brick-and-mortar, face-to-face sales. It's my contention that payments should be the crown jewel of the shopping experience. Nowhere is this truer than in online shopping, where the payments process can be the deciding factor for whether a transaction takes place. We've all had experiences of clunky web payment systems that leave us thinking, "If this is so complex, how safe could it be?" Conversely, Amazon.com's one-click payment system leaves you not only feeling secure, but catching your breath at how easy it all was.
Since we started by talking about Apple Pay, however, let's line item what the technology company/retailer has done right. It's leveraged its great brand to instill public trust in its product — certainly necessary for any mobile payment initiative. It's the Apple brand itself, not the partnerships with the brand, that's instilling this confidence.
However, there are several shortcomings, as noted. Apple Pay has very limited reach. First, it's only possible to use it on the iPhone 6 and 6 Plus — its only phone models that are NFC enabled — and the Apple Watch. Second, even as major retailers migrate their point-of-sale systems to NFC on account of the EMV liability shift which kicks in this October, not all merchants can accept Apple Pay yet. In fact, only about 2 percent of major retailers accept NFC in the U.S.