Here comes Apple Pay. But What About the Customer Experience?

Today, Apple officially released Apple Pay — joining other mobile payment systems like Google Wallet, PayPal, and Square — allowing iPhone 6 users to make digital payments at participating retailers across the U.S., including Macy’s, McDonald’s, Starbucks, Staples, Chevron, and Walgreens.

Apple CEO Tim Cook has planted the Apple Pay flag in the ground, boldly declaring, “We think it is going to be profound. It’s going to change the way we pay for things.”

On the surface, it sure feels like Apple Pay represents the future of mobile payments. With multiple layers of technology that keep personal identity and financial information secure, Apple Pay’s appeal (and praise) comes from its high level of security in comparison to other mobile payment platforms. And with news that Apple Pay will work with next year’s Apple Watch, it signals a (potential) perfect marriage between mobile payments and wearable devices.

According to a recent Computerworld article, Apple Pay supports the credit and debit cards from American Express, Visa, and MasterCard. The payment platform is also backed by more than 500 banks — who represent 83% of all U.S. credit card purchasing — including Bank of America, Citi, Chase, and USAA, among others.

Despite the launch-day buzz, it seems there are very few Apple-o-philes actually waiting in line to use Apple Pay. According to Computerworld, “Apple Pay will purportedly work in about 220,000 brick and mortar stores in the U.S. — just 5% of all available stores.” That’s not very many stores, but Apple does have to start somewhere.

But for Apple Pay to really take off, retailers will need to leverage mobile payment technology as a means to improve the customer experience — and to truly entice customers to reach for their phones, not their wallets. For example, starting next year, Starbucks will allow U.S. customers to order and pay for their coffee ahead of time, straight from their mobile devices. This means the coffee ordering and buying experience will now fit even more seamlessly into customers’ lives, perhaps saving them a few minutes during their morning commute.

For now, many banks and credit card companies are on board with Apple Pay, and Apple will continue to sign up retailers. However, this should serve as a wake-up call to traditional players in the industry. As Apple Pay (and possibly others) gain momentum and improve the consumer payment experience, the status quo will change. Established card issuers and payment providers may likely face disintermediation if they do not act with urgency to offer a compelling customer experience alternative.

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