How Apple Pay Makes Life Better for Non-Users

Apple Pay is good. It's good for iPhone users and it's good for Apple. And guess what? It's even good for non-users.
Posted October 20, 2014

Mike Elgan

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 Apple Pay, which is the long-awaited Apple mobile payment system the company rolled out this week, will probably make a lot of iPhone and iPad users very happy. What's not to like? It makes capitalism more friction-free. If you have the right hardware, it makes spending money easy -- just tap an NFC device at the register while touching the iPhone's Touch ID sensor, and the purchase is done. (Online, just touch the sensor to verify payment.)

And Apple Pay will almost certainly make Apple happy. Apple is going to make a lot of money on this.

But an unintended consequence of the Apple Pay rollout is that it's going to make a lot of other people happy, too.

Here are some of the unexpected beneficiaries of Apple Pay.

Google and Android Users

While a minority of smartphone owners in the US uses iPhones (just over 40% at last count), that minority is made up of people with more money to spend. Median income for American iPhone owners is about 40 percent higher than Android users.

Within a year or two, it will be considered a kind of suicide for higher-end retailers to not support Apple Pay, as iPhone users will expect to use it.

Google has been trying, and mostly failing, to start a widespread movement in favor of mobile payments with Google Wallet. So have others, including the unfortunately named Isis, now called Softcard, Square and others.

Google Wallet is not widely supported. And the NFC that it requires for a normal point of sale process has also not been widely deployed in the past. There are some six million US retail outlets, but fewer than one quarter of one million support NFC.

Over the next two years, we can expect an explosion in the adoption of NFC in retail stores.

Most of the credit is due to the hackers who compromised major retailers recently -- including Target, Home Depot, Supervalu, UPS, Dairy Queen, P.F Changs, Neiman Marcus and others. In these massive breaches, hackers stole the personal and financial data (including credit card data) of dozens of millions of users. As a result, many retailers are quickly embracing EMV point of sale systems (EMV stands for Europay, MasterCard and Visa). And, guess what? These systems all come with NFC built in.

But some credit is due to Apple, and the comprehensiveness and quality of their launch. They're mainstreaming mobile payments in the US at long last. That higher usage and higher visibility will accelerate the adoption by retailers of NFC point of sale systems, which will in turn drive the installation of NFC in Android phones and the use of Mobile Wallet by Android users.

It's also likely that Google or Google handset makers or both will duplicate the convenience of Apple Pay, improving both the experience for Android users and also adoption among those users.

In a nutshell, Apple Pay will increase the number of retailers using NFC to a higher level than would exist without Apple Pay, and also drive better user experience for Android mobile wallet applications.

Retail Stores, Hotels and Restaurants

Over the next couple of months, retail outlets that support Apple Pay will include dozens of major companies, including McDonald's, Disney, Whole Foods, Macy's, Bloomingdale's, Chevron, Texaco, Foot Locker, RadioShack, Walgreens and many others.

Apple Pay will make life better for retailers. In addition to replacing credit card purchases, which are time consuming, it will also replace many cash transaction. This will lower the cash on hand, reducing the incentive for robberies.

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Tags: Android, ecommerce, iPhone, iPad, Apple, Apple Pay

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