Industry responds to Apple’s entry into payments space

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Apple’s market entry into payments with the launch of its iPhone 6 and Apple Pay service has attracted a raft of comments from the payments industry. Here’s a flavour of the sector’s response to the move.

Souheil Badran, senior vice president and general manager for Digital River World Payments, said: ““Apple’s decision to enter the payments space looks set to have a far-reaching impact on consumers, merchants and – of course – Apple’s own business. For consumers, a new way to pay that is fast and convenient is good news, especially if it means speed at the checkout, and not always needing to carry a wallet or card to pay at a physical store.

“For Apple, this looks like a timely move. The company has been laying the foundations for this kind of initiative for some time: it introduced its Touch ID fingerprint sensor with its last iPhone launch and its iBeacon system of Bluetooth transmitters has now been available for about a year. These elements, combined with the 800m plus credit cards that are already registered with Apple through iTunes, mean that it is well positioned to carve itself a slice of the global mobile payments market, which was estimated to be worth $235bn in 2013.

“For merchants, the outlook is less certain and there remain more questions than answers right now. The payments market has been inundated with new wallets and technologies in recent years and, with no clear winner among consumers, many merchants have found it difficult to decide what payment offerings to invest in, and when. If Apple can succeed in this space, and offer a ubiquitous solution, it could help simplify the landscape for many merchants. Ultimately, long-term prospects will depend on how it will work with existing payment technologies and, of course, user adoption.”

Neil Garner, CEO and Founder, Proxama, said: “This is a big step forward. With Apple on board, NFC gets the final seal of approval it needs.  Apple’s formidable strength is in convincing consumers that they need something, so in that regard its support of NFC is a turning point for worldwide consumer adoption. It is likely to spark a reaction from Android and Windows phone makers who will want to ensure their devices match the innovative uses of NFC we expect from Apple.”

Andrew Morley, new CEO of out-of-home advertising leader, Clear Channel UK, said: “Both the iPhone 6’s NFC mobile wallet and the new Apple watch offer huge potential to outdoor advertisers. With current UK iPhone ownership at approximately 26% of the market, Apple has the potential to change the perception and raise awareness among brands, advertising agencies and consumers of NFC and the huge potential it holds to engage audiences.

“Clear Channel’s NFC mobile interactive ad platform – Connect – has experienced over 360,000 interactions through Android and other devices since its launch last April – a strong indicator that consumer demand is high.

“Connect helps advertisers deepen engagement with consumers who can use NFC tags at thousands of our advertising sites to download advertiser content, find out more about a brand, receive money-off vouchers, find out local information, enter competitions and play games.”

“The inclusion of an NFC mobile payment solution in the new iPhone could trigger the start of a battle in the mobile wallet sector. This will mean big brands getting behind a continued education and consumer awareness piece that will encourage people to experiment and use the technology when they see an opportunity such as Connect.  It could also offer a truly frictionless way to purchase goods and services on outdoor media.

“These are very exciting times for the advertising industry and Apple’s announcement could be a significant development in the evolution of out-of-home media in particular.”

Martin Smethurst, managing director, retail, at Wincor Nixdorf, said: “Apple’s long anticipated move into the mobile payments market finally happened yesterday with the launch of Apple Pay. This is an exciting move by the company and sends out a clear signal to competitors but the reality is it’s just the latest in a long line of ways for consumers to pay for goods and services. What’s significant is that it gives retailers another channel to engage with today’s device driven consumer which can surely only positively impact the shopping experience in-store. That said the real challenge for retailers is to ensure that all the channels work together seamlessly, and provide that much-needed consistent experience customers have come to expect, or they will just walk away.”

Theresa Jameson, senior analyst, consumer payments, Datamonitor Financial, said: “Apple’s fashionably late entrance into mobile payments came with just about all the flash and fanfare needed to distract us from last week’s iCloud furore. However, with strong evidence suggesting that mobile wallet security is still a major concern for many consumers, the tech giant’s days of being questioned about security – especially where a new payment system is concerned – are far from over. Apple will need to demonstrate that it can be entrusted with the security of a payment system.”

Sam Murrant, analyst, consumer payments, Datamonitor Financial, said“Apple has put its brand, money, and marketing machine behind NFC – giving the struggling technology a huge boost. Apple clearly sees an opportunity here, and with its track record, a reversal of the technology’s fortunes may be expected. However, this reversal won’t come quickly, and Apple has major hurdles to overcome before it can be a reality. Apple has made a good start here, bringing many big brands on board, but more merchants – particularly SMEs – must be persuaded to upgrade their POS terminals for consumers to be able to use NFC payments. Apple must also prove that it can solve the biggest problem with NFC – namely, what problem does it solve for consumers?”

Viv Craske, head of planning & digital, Live & Breathe, said: “Last night Apple shook up the tech and retail sectors with some force, most notably reinventing mobile shopping with Apple Pay to set the bar even higher for consumer expectation.

“Using mobile and wearables in-store for payments will create a snowball effect on other uses of the tech in-store, such as showrooming, coupon collection at POS and in-store navigation. As a result, shoppers will use their mobiles more not just during the path to purchase, but in-store too.

“Shoppers will be able to tap NFC-enabled shelf-edge POS to collect coupons and redeem them at till using Apple Pay. Combined with in-store beacons delivering targeted and personalised coupons and offers, the mobile and wearable devices look set to become both a personal assistant and a way of making coupon redemption and payment in-store easier than ever.

“As a result it is imperative that retailers and brands alike start looking at Apple Pay and ensuring they have plans to accept the tap to pay methods now in order to capitalise on the technology as soon as it lands with the iPhone 6 and iPhone 6 Plus later this month.”

Tobias Schreyer, co-founder and chief commercial officer at the PPRO Group, said: “The introduction of ApplePay to the iPhone 6 will encourage the whole industry to adapt at a faster rate. This advancement could position Apple as the most powerful force in mobile payments, where it will contend with the Google Wallet and PayPal app, neither of which have had significant uptake amongst retailers.

“Apple have stated they won’t store any transaction details but security is still an issue that people need to be aware of, especially considering the considerable amount of loss / theft associated to mobile devices and the increase of targeted attacks. This development increases the need for biometrics as a confirmation process, providing customers with an easier, more efficient experience which they’ve come to expect, and which will be a major change within the industry.

“In addition, it will increase pressure on US banks to ensure users credit cards are verified in order to be added to their Passbook. This is really good news for the future of mobile payments and complements already existing offerings from the likes of Cashcloud.

“As Apple are starting the process in the US market, this gives the UK the chance to prepare. Retailers should anticipate that consumer uptake will be fast and will need to be ready.”