Could Mobile Payments be the Next Apple Game Changer?
There aren’t many technology companies that will receive global headlines and reams of analysis from a press invite that reveals little more than a date and venue. But Apple aren’t just another technology company – where they lead, or refine, others have tended to follow. Could mobile payments be the next area where Apple takes a lead?
Apple’s influential niche
As of Q2 this year Apple commanded an 11.7% share of the smartphone market according to the IDC – down slightly on the 13% of the previous year. Clearly impressive when compared with Windows Phone (2.5% market share) and Blackberry (0.5%) – falling from 3.4% and 2.8% respectively – but it’s Android that still dominates the smartphone market with an 84.7% market share (a 5.1% gain year-on-year gain).
While Apple deliberately targets consumers looking for a top-end smartphone willing to pay a premium, conversely Android spans a range of handsets (from budget to premium) and a wide range of manufacturers (including Samsung, Huawei, Lenovo and LG) and achieves volume as a result. All this means Apple must continue to innovate and shift volumes at the top end of the smartphone market allowing previous models to trickle down to those looking for a (somewhat) cheaper gateway to Apple’s ecosystem.
New data from Counterpoint suggests that the iPhone 5s remains the best-selling smartphone in the world. However, competitors’ models are no longer playing catch-up, and some arguably now surpass the Apple flagship. In some respects, the 5s delivered only incremental improvements over the iPhone 5 – TouchID (via a home button fingerprint sensor), 64-bit processing and the M7 motion co-processor were all good investments for future innovation but not yet essential.
This year Apple need to give compelling function to the impressive form – and, if the rumor-mill is to be believed, mobile payments could be a key driver.
What can we expect?
On 9 September journalists will convene at the Flint Center for the Performing Arts in Cupertino, California, to witness the likely unveiling of the latest iPhones and, potentially, a new wearable device – the long-mooted iWatch, which would be the first new-category Apple device since the iPad back in 2010.
The rumor-mill, though always churning, has cranked up in recent months. The press invite aside, the few tangibles we’ve seen include details of iOS 8 (unveiled at Apple’s Worldwide Developers Conference (WWDC) back in June) and a steady stream of product components purported to belong to the next iDevices that have leaked onto the web daily.
This time around, 4.7 and 5.5inch phones are rumored and would make sense given the rise of competitors’ ‘phablet’-style devices. There are also suggestions that a near field communication (NFC) chip might finally be included which, coupled with TouchID, could see Apple move to take a bite out of the mobile payments market.
Apple and mobile payments
In an earnings call in April 2013, CEO Tim Cook said, of mobile payments:
I think it’s in its infancy. … I think it’s just getting started. And just out of the starting block.” Almost a year later, in January 2014, the true importance of TouchID was hinted at with CEO Cook confessing: “The mobile payments area in general is one that we’ve been intrigued with, and that was one of the thoughts behind TouchID.
At WWDC in June access to Apple’s fingerprint scanner via an API was mentioned albeit briefly – showing how finance app Mint could use the scanner for authentication.
When it comes to Near Field Communication (NFC), Apple have sidestepped the technology thus far – utilizing Bluetooth and Wi-Fi to power proximity service iBeacon and QR Codes in its ticketing wallet Passbook. However, in recent days rumors have surfaced suggesting that Apple could be about to relent – with component and schematic leaks suggesting support for an NFC-compliant chip and even claims that Apple has reached deals with American Express, Visa and MasterCard to launch a mobile payment service. NFC may even prove useful by allowing an iWatch to talk to an iPhone, supporting payment by wrist according to some analysts.
Can Apple kick-start the mobile payment market?
Apple’s interest in mobile payments is clear and Tim Cook stands well placed to take advantage of what is a dynamic and fast-growing marketplace.
Apple already holds the world’s largest store of credit/debit card details via more than 800 million iTunes accounts. The inclusion of NFC and deals with card providers could provide the necessary payment flexibility in bricks and mortar stores.
Apple has a secure and controlled architecture in iOS and that TouchID fingerprint scanner offers an innovative authentication process, but will it be enough to convince customers that they won’t be left out of pocket if and when transactions are compromised? Moreover, will customers be convinced of the ease of use to finally ditch their physical wallet in favor of an iDevice and be sufficiently enamoured to pay a premium for one in the first place?
Markus Milsted, CEO of global mobile payment solutions provider Omlis, said:
Where Apple leads other smartphone manufacturers tend to follow. An iPhone 6 that delivers totally secure and easy to use mobile payments has the potential to act as the catalyst the market really needs.
Today we’ll find out whether Apple have been able to come up with a solution that bridges a complex and fragmented ecosystem, allays concerns over fraud, and provides a frictionless user experience. We are very excited to learn more!