With the recent introduction of the NFC enabled iPhone 6/6+, many of our clients are interested in how, or if, its new proprietary Apple Pay app will impact retailers. To help answer some of these burning questions, we recently published our thoughts on Apple Pay in a document titled “BRP INSIGHTS: How will Apple Pay impact retail?”
This blog post will touch on some of the key points of this document, but is not as comprehensive, so I encourage you to download and read the entire paper.
Low Market Acceptance of NFC and Mobile Wallets
NFC and mobile wallets in general have struggled to gain acceptance and adoption in the U.S. Will the introduction of the massively publicized Apple Pay be the catalyst to drive retailers and consumers to embrace NFC payments?
Apple’s loyal followers, who are typically quick to adopt new technology, will likely help accelerate the learning curve and acceptance of NFC payments. Apple Pay has the strong likelihood of being the tipping point for adoption of NFC-based payments and will probably become an early NFC leader in the US.
The advanced security of Tokenization will help
Despite the public’s trust being nearly obliterated with the Target and Home Depot security issues of late, the tokenization processes which Apple Pay will use to protect data will help alleviate the growing consumer concerns with credit card and data security.
How will Apple Pay impact traditional retailers?
There will be a very slow but steady impact on retailers that will depend on several factors:
- Consumer demand for faster transactions – With the impending implementation of EMV in the U.S., consumers may need to leave their cards inserted in a payment terminal for 6-10 seconds. In contrast, NFC based transactions may be quicker based on a retailer’s implementation. Once consumers begin demanding faster payment processing, NFC payment adoption will accelerate.
- Consumer inertia – NFC will receive a boost with Apple championing the technology, but this will be a slow process of building demand for something most consumers have zero bearing on. Consumers need an incentive to change.
- Retailer capital investments – Many retailers are not clamoring to make capital investments in the NFC compatible hardware and certification process.
- Potentially greater impact on online retail – Apple Pay will provide online shoppers an alternative to Google Wallet and PayPal, which in turn may spur special deals and lowered transaction fees as these entities battle for market share.
The actual impact of Apple Pay on retail remains to be seen, but it will certainly be interesting to see how it unfolds.
I welcome your opinions on this topic. Please share you comments below.