Apple Pay will be groundbreaking...when it’s mainstream, say analysts

It’s easy, as consumers, to get excited about the announcement made by Apple yesterday, which unveiled the Apple Watch, NFC-enabled iPhones and Apple Pay. But for enterprises the announcement deserves greater scrutiny because it poses serious questions about how quickly and how much they should invest in these still niche areas of mobile payments and wearables.

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It’s easy, as consumers, to get excited about the announcement made by Apple yesterday, which unveiled the Apple Watch, NFC-enabled iPhones and Apple Pay. But for enterprises the announcement deserves greater scrutiny because it poses serious questions about how quickly and how much they should invest in these still niche areas of mobile payments and wearables.

The fact that Android has a significantly greater share of the smartphone market globally should also make enterprises pause for thought, despite the enthusiasm that has accompanies the Apple launch.

The gift of the mobile mind shift

The reaction from analyst house Forrester was overwhelmingly enthusiastic. The Apple announcement appeared to cement an idea Forrester has been championing this year - that businesses need to embrace the “mobile mind shift”. This is the idea that customers and employees expect to be able to get what they want in their immediate context and moments of need.

For example, Frank Gillett, vice president and principal analyst at Forrester, said: “The larger 4.7 and 5.5 inch screens create a much larger canvas for mobile app experiences, which will help accelerate the mobile mind shift already underway.”

Meanwhile, Julie Ask, a fellow vice-president and principal analyst, enthused about the Apple Watch going hand in hand with larger phones. “Apple continues to push the envelope on creating a platform to deliver the best digital experiences to consumers in their mobile - and now micro - moments,” she said.

“The Apple Watch is a perfect companion to larger phones, letting consumers be in the now in their mobile moments, but letting them leave the phone in their pocket or purse until they need it for the more complex interactions that apps support.”

Further, JP Gownder, Forrester vice-president and principal analyst, who has focussed on wearable technology for both workforce enablement and customer-facing applications, said that the Watch was a sign of Apple “legitimising and creating” the mass market wearables category.

“Smartwatches shouldn’t be an exercise in screen miniaturisation," he warned. "Instead, they should help users to interact with the physical world more effectively.".

“With NFC, Apple Pay, and health and fitness monitoring, the Apple Watch interfaces with retailers, healthcare providers, and the human body to create a value proposition that’s different from simply pulling a phone out of one’s pocket.”

Caution over hype

However, Denée Carrington, a Forrester senior analyst, acknowledged that it is still early days for mobile payments, not least because Apple Pay will only be available in the US initially.

“Apple Pay will ignite consumers’ interest in mobile payments by providing a seamless, secure and easy way to pay both in store and on the go. By partnering with the leading merchants across retail, grocery, drugstore and dining, consumers can use Apple Pay with merchants they shop every day - which will accelerate the growth of mobile payments in the US,” she said.

Outside the US, Carrington’s caution is reflected by other industry stakeholders.

Dave Hobday, managing director of Worldpay UK, suggested that retailers should boost investment in new payment readers “when it’s clear customers are ready to use them en masse”.

With figures from Forrester showing that the Apple OS market share in Europe being just 17 percent, with Android’s expected to hit 67 percent this year, the time for investment to accept Apple Pay in stores may not be some time.

“We’ve seen a 248 percent increase in contactless payments since 2012, but it’s taken eight years to get to a point where consumers are comfortable enough to really start using the technology,” Hobday pointed out.

“There’s no doubt Apple has the clout to change consumer behaviour, but we’re not yet at the stage where retailers will lose a sale because they can’t take mobile payments.”

Don’t adopt technology without a business case

Digital River World Payments, which offers global payments and processes more than $30 billion in online transactions globally, agreed that the Apple announcements around Apple Pay raised more questions than it provided answers.

“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,” said Souheil Badran, senior VP and general manager for Digital River World Payments.

“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.”

Other analysts have warned retailers against making the mistake of adopting new technology for technology’s sake - a pertinent lesson for businesses about all technology, not just Apple’s.

“Before anything else, retailers need to understand what their goals are in implementing any mobile payments or point-of-sale (POS) strategy,” said John Gessau, mobile payments solutions lead at global payments company ACI Worldwide.

“Retailers should see the current mobile disruption as an opportunity to review their overall omni-channel payments strategy. They would do well to avoid leaping into such a volatile environment, deploying a solution that will not meet their needs, only to find that they require a ‘rip and replace’ down the road as the market evolves.”

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