Apple’s expected entrance into mobile payments with the launch of the iPhone 6 is set to spark mainstream adoption, but the demise of the credit card may still be some way off.
Despite the vendor’s widely discussed ability to bring new technologies to the mainstream, James Wester, IDC practice director for Worldwide Payment Strategies, says the tough payments landscape means the firm will be relatively “modest” in its initial plans to support transactions through its device.
“That's a smart play. Changes in payments take years to work their way through the value chain, and Apple will be wise to take its time and get each next step right before launching,” he said in a report entitled Business Strategy: Apple and the Payments Tipping Point.
He continued: “Even if Apple's entry into payments proves to be the tipping point necessary to get more people using their smartphones to pay, that doesn't mean adoption will explode immediately. But it does mean that the move toward mobile payments will increase at an ever faster rate.”
Although Apple already has experience with payments - holding 800 million iTunes accounts, and creating its Passbook voucher 'wallet' 2012 - the launch of the iPhone 6 is expected to see the Cupertino firm move much more seriously into the space.
Reports have not been confirmed, but is likely to mean the introduction of a mobile wallet to rival the likes of Google and PayPal and the inclusion of near-field communication technology to enable purchase of goods by swiping the device against a payment terminal.
There have have also been rumours of partnerships with payments providers such as MasterCard and Visa, and creating this ecosystem will be crucial to success in a highly complex market that requires significant scale to be economically viable for all parties involved - not just Apple and its customers.
“For Apple to succeed, it must create that compelling case for multiple stakeholders, one that is better than what is available to them now,” warned Wester.
“It is somewhat easier to see Apple addressing the consumer value proposition [...] it is more difficult to see a compelling case for merchants, acquirers, and issuers.”
As for the inclusion of NFC, payments is likely to be only one aspect of Apple's plans.
"It may be utilised for payments in some way, but it will more likely be used for things like identification, device pairing, and building access. Those are use cases that consumers have much more interest in than paying using their phones," he said.