Apple Pay wasn't the first digital payment platform in the market, nor was Apple the first to introduce NFC capability to their handsets. But then, they didn't develop the first MP3 player either and we all know how that played out.
In this post to the IR-Podcast, John Dunne shares his thoughts on why Apple Pay not being first to market doesn't really matter and where he believes the digital payment landscape will be in 5-years time.
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Scott: We're told that being first is best, but is Apple Pay an exception? John Dunne, Vice President of Products at IR joins us. John, Apple Pay hasn't been around long, but it is changing the game, isn't it?
John: You know, they are, and my favorite saying here is, you know, sometimes the second mouse gets the cheese. And, I think Samsung put an NFC chip in an Android phone probably two years before Apple Pay launched. Could be longer. And yet you'd never saw so much publicity or so much buzz or really that many people out there using it. And certainly there was a case of is the retailers' situation where they can take NFC payments? You know, how was that working for them? But I think what the story here is is that if you're going to go out with an early innovation, you've really got to think it through end to end. And, you know, I'm an external observer of the market here, but what I've seen is that Apple had a vision of making payments from the iPhone and now the iWatch, or the Apple Watch, and they looked at what the user experience needed to be end to end and they looked at the shortcomings of what the first to market people had and then went out there and established relationships with the key players and built the whole end to end process so they could promote their product. I mean, it's just making a payment. It doesn't matter whether you have an Android phone or an Apple phone. But how do Apple Pay differentiate? Well, they differentiate on ease of use. They differentiate on security and they've tried to make sure that they add value not just to the consumer who can now make a payment by their phone, but they're adding value to the payments process themselves by making sure their payments, once the card's registered, are being performed in as absolute secure way as possible with their tokenized numbers.
Scott: You know, it's an interesting juxtaposition here in that Apple did it right by doing it second. Normally they're known for doing it right, doing it first, innovating, and then everyone else copies. So it's sort of reversed here.
John: You know, I chuckle a bit. I have to disclose I do have an iPhone and I do have a Mac, and, but you know, just some of the classic things is you know, Xerox invented the graphic user interface and then it was seen in a Mac and then it was seen in Windows. And they certainly didn't invent the first MP3 player, but they certainly brought it to market in a way that consumers wanted to adopt it. And, without getting too beaten up by Apple, what I would say is they're very very good at creating products that meet the needs of all the stakeholders, not just one. And I think that's one of the advantages they sometimes get. You know, they can be very quick to market once they decide to go, but they're able to look at little startups or people that have moved into a market and work out okay, what are the gaps, what have the stakeholders there forgotten about? How do we take on this ecosystem and make it work for everyone?
Scott: So what does Apple Pay do better than some of the other payment options and where is their room for growth and improvement?
John: Well, I think what Apple Pay brings is firstly, it certainly has to be seen as security. From a consumer perspective, you know, I can remote wipe my phone. I require my fingerprint on it to make a purchase. From an institution perspective, you know, the numbers that are put on are per-transaction tokenized. And if they happen to be intercepted, they're no good other than for that single transaction. And so there becomes an air of everybody involved feels that this transaction is being performed with more security. And from a consumer, you know, I still have to either pull out my phone or pull out my wallet, but the ability for me to make a choice of well, if I'm walking down to the store to pick up some milk in the morning, I can just take my phone with me and not have to worry about finding my wallet or finding cash or my card and taking that. So there's an element of convenience, but I think that's the minor factor. The major factor to me is that you can make purchases with tap and go with confidence regardless of whether the card you've been issued has that capability or not.
Scott: Where will we be in five years?
John: Well, you know, I think it's only inevitable that people will want to just be there transferring money to each other as easily as they can with retailers today and merchants. And so I think without a doubt the ability to send money, the whole concept of a card will hopefully be fading away and you will have an account identity that you could have linked. You know, we're seeing the Apple Watch come out, which is just a more convenient way than pulling your phone out. Just tap your wrist on the device and hopefully not scratch the face off it. But, I think the ability to do payments just as easily as we can with tap and go between individuals is going to come very soon. I mean, the little example here is we have the office softball team warming up for summer. Everybody's got to kick in 25 bucks. Now that means fifteen people have got to run down and find an ATM and pull $25 out and give it to another person who's just going to go down and bank it. Wouldn't it be really easy if we could all just walk up and tap my phone on his phone and suddenly $25 appeared in his account to do that?
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