A endless list of companies — from wireless carriers and handset makers to tech giants as big as Google — have tried to muscle their way into the mobile payments market, by releasing clunky ways to get consumers to pay for their groceries or a movie ticket with a swipe of their phone.
Now the speculation is that Apple is gearing up to take a shot at building a better mobile wallet. Expectations are high for the Cupertino, Calf.-based company. The prevailing thought is that Apple’s mobile wallet will be the first to take off thanks to the company’s ability to develop elegant and easy-to-use services that appeal to a wide audience.
So, if the rumors are true, and Apple does roll out a mobile payments platform tomorrow, we’ve come up with five reasons why Apple will be one of the major factors in changing the way we pay.
1. Apple has been laying the groundwork for years
Apple is not starting from scratch, even though many others have beat it to market.
The company owns several patents in the space, and has already been experimenting with in-store transactions through apps, like Passbook, and services, like iBeacon.
The Passbook application allows users to store coupons, or airline boarding passes, or event tickets on their phone using 2D barcodes. iBeacon can help retailers identify when someone has walked in to their store and then, for example, allow them to push out notifications of sale items. It can also enable payments at the point of sale.
2. Apple controls both the hardware and the software, so it can make the right technology choices.
According to several reports, the iPhone 6 will come loaded with near-field communications, or NFC, the technology for short-range wireless data exchange.
If Apple does its job right, consumers won’t even know or care what technology they are using, but having the authority to tie the services all together is crucial to its success. Google learned this hard way when it realized it couldn’t necessarily dictate to the carriers and handset makers what technology to include in the handset, even though it owned the operating system.
3. Apple is already a payments kingpin
Thanks to iTunes and the App Store, Apple has a growing stockpile of credit card data to the tune of 800 million accounts, which are making thousands of transactions every day around the world.
It is no doubt using this volume as leverage in its talks with banks and credit card processors. Bloomberg reports that Apple has inked a partnership agreements with major payment networks, banks and retailers, including Visa, MasterCard, and American Express, for its mobile payments platform.
As part of this agreement, Apple could receive a portion of every sale as revenue, which is an important difference to other efforts in which the economic benefit to the company has been less clear. For instance. Google was willing to provide these services to retailers and banks for free in hopes of collecting valuable data about consumers that it could use for marketing purposes.
4. Mobile payments are on Apple CEO Tim Cook’s radar
Success starts at the top, and an engaged CEO goes a long way to making things a reality. In January, Cook told Wall Street analysts: “The mobile payments area in general is one we’ve been intrigued with…It was one of the thoughts behind Touch ID.”
Touch ID is a fingerprint recognition technology that is only available on the latest iPhones. It allows consumers to use their finger to unlock a smartphone, and verify mobile purchases made via the iTunes Store. Touch ID could play a role in making consumers feel much more secure about using a digital wallet, a critical component toward getting adoption.
5. Apple will succeed because everyone wants it to
This may be oversimplifying things, but one reason Apple may succeed where others have failed is because people want them to — all too often, I’ve heard someone in the space reference “waiting for Apple to make a big play in mobile payments.”
It’s true, Apple has the marketing dollars to pay for expensive TV campaigns that will educate the public on how easy and safe it can be to use your phone to make payments in the physical world. With this kind of control over consumer mind share, even the competition will be rooting for Apple since other mobile payments or digital wallets, especially on Android, could benefit from all the buzz.
To be sure, mobile payments are a complex puzzle, requiring consumers, banks and retailers to all be on board using the same technology. Typically, if one of the three components doesn’t materialize — and they often don’t — the service becomes too limited for consumes to adopt at scale.
Apple may be the most likely player to convince all three sides that working together will have benefits for all.
So, check back in tomorrow to see if the wait is finally over.
