Assessing the Future of Mobile Payments and how it will impact you

If you’ve thumbed through a timely Fortune Magazine article, or visited the publication’s website recently, you might be aware of the company’s marketing stance regarding the use of Apple Pay, a new automated payment feature on the iPhone 6. While paying with a phone is certainly interesting (and is, in fact, already commonplace in countries such as China and Japan), this technology has actually been available for several years, yet Apple is just now incorporating it into its devices. So, what’s all of this highly anticipated buzz about? As with most Apple-branded technology, it’s safe for marketers to assume that there may be more to the story than meets the eye.

In its first week, Apple sold 10 million of its iPhone 6 devices, which offer a bundle of newly introduced features and upgrades, while also incorporating this Apple Pay technology. With Apple Pay, in addition to payments, the device also incorporates Passbook capabilities, allowing users to manage boarding passes, movie tickets, and gift cards easily from their iPhones. This new functionality also allows businesses to synch contact information with Passbook, and in turn, providing the capability to push special discounts and notifications directly to their customers’ phones.

The primary issue thus far with this payment and Passbook technology is that it hasn’t really caught on. In some ways, redeeming gift cards and coupons in this manner seems more burdensome, especially when customers are already relying on plastic cards for nearly all other processes. Even Apply Pay projections seem to imply that within the year, only 2.5% of payments will be mobile. However, Apple aims to have made a genuine attempt to remedy this by bringing merchant banks and card issuers onboard, and by employing Touch ID fingerprint technology, all in an effort to ensure the highest level of fraud protection.

On the other hand, there is one interesting trend to note – more companies are embracing mobile payments as a means of developing relationships with customers. About 15% of Starbucks’ transactions are now completed using the company’s app. In a world where the app-based payment trend doesn’t seem to be gaining much traction, certain businesses have honed in on what it means to have the ability to convince the user to make a mobile payment in this fashion. App payments make purchases more efficient for the purchaser and allow the business to collect information from the user, including: favorite orders, amount spent, and frequency of purchase. Interestingly, customers appear to willingly provide this information in exchange for a reward, and a business may even establish reward parameters, such as after a user spends a certain amount.

[quote]Perhaps we aren’t entering a world where all of our payments will be made from our phones, but rather, where we’ll make purchases from places we shop frequently – all from our phones.[/quote]As companies continue to move in this direction, opportunities exist to capture even more targeted data to help tailor strategies to meet client needs, while also reducing associated costs.

As previously mentioned, the ability to make payments from one’s phone has been in existence for quite some time, however Apple has a unique, innate ability to allow its technologies go mainstream in a short period of time. As we have recently seen, 10 million more people have access to Apple Pay than they did just weeks ago, and as a result, we may be adopting a new paradigm that leads to business being conducted solely via mobile devices, thereby eliminating the need for debit and credit cards as we know them. Despite the fact that we might see early adoption in only a few companies, if the technology catches on and proves valuable, there may come a day when Apple Pay is as common as debit and credit card point-of-sale machines are today.

As a result of this shift in thought processes, marketers will also be able to continue to send relevant information to customers based upon purchasing behavior. For example, one auto company already sends automatic notifications each time its customer is due for an oil change, offering discounts based upon their user activity on the app.

Will Apple Pay be a game-changer? Probably not –  well, at least not within the next decade. But, if nothing else, this emphasis on mobile payments reinforces the notion that we’re living in an era where mobile is truly at the forefront. Marketers should aspire to continue to find new ways to reach people, starting with their smartphones.

To discover how your business may become better equipped to provide an enhanced user experience, including Apple Pay, and employ targeted strategies that attract satisfied, returning customers, contact us today to determine how we may assist you!

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