As Apple Pay reaches its two and half year birthday, it's time for us to take a look at how well it's faring with both users and the payments industry as a whole. When it made its U.S. launch in October 2014, it reached a level of success that garnered widespread attention. You can't argue with the numbers: 2 million locations, 1,000 banks, and 5 million registered users. Perhaps it hasn't been quite as successful in all different regions like Apple would have hoped for, but it certainly has created a persistent industry-wide buzz.
Turning a Business Model on its Axis by Loading Up Credit Card Details
This is probably just the tip of the iceberg when it comes to Apple's foray into the payments industry. Their first step was to allow customers to load their credit card details. Users can essentially walk into a store and pay with their phone, just as if it was a credit card. In classic Apple fashion, the company found a way to get themselves into the payment flow and take a cut of every transaction made with an iPhone or Apple Watch. They've practically turned a business model that's been around for years right on its axis. (Up until now, payment schemes like Visa and MasterCard have dominated the industry.)
Aim to Gain an Equal Footing at the Top of Wallet?
Apple Pay is an innovative way to jump into the payments industry, but cards are likely just one part of a much bigger play. I think their larger aim is to gain equal footing with other payment vendors at the top of wallet. Whenever you go to pay for something, Apple wants to be instrumental in completing the transaction.
Apple Pay: Poster Child for Convenient Payments in the US
Apple's impact on the payments industry has varied depending on the circumstances in each region. If you look at the U.S. prior to Apple Pay, there weren't many NFC-capable Point of Sale terminals that allowed you to wave your card, phone, or other payment device over a terminal to complete payment. Adoption of NFC technology was just taking off at this time, and Apple Pay had really pushed adoption along in the region. Apple's implementation has almost become the poster child for making payments more convenient.
Apple Pay Not as Disruptive for Mature NFC Markets
Looking at my own region here in Australia, we've had Tap&Go cards available for a few years now. Apple Pay hasn't been quite as disruptive in that respect. However, there's still the promise of only having to carry around a single device. Instead of having to carry a wallet full of cards, there might come a time when I only need to bring my phone. Unfortunately, that promise hasn't been realized just yet. I still can't pay for everything everywhere with my phone. At a minimum, though, Apple Pay has pushed forward the discussion about the ease of making payments. There are better alternatives to carrying around a wallet full of cards—and Apple has made it look real.
Does the Future hold Person-to-Person Payments?
It's interesting to consider what Apple Pay will look like in a few years from now. Apple was rumoured to be launching a person-to-person payment feature back in 2015. This is an interesting development, because it's an area that's challenging for banks and other payment providers. If Apple is taking on this unsolved problem and they have an elegant solution, it's yet another reason why they might be pushing towards becoming a top-of-wallet payment solution. Why would you even need to have cash in your wallet or write out checks? Why would anyone want to carry a wallet full of cards when you can do everything with your phone?
