Apple pay and the next 5 years
Apple Pay: The Next 5 Years
By: Jeff Rubel
12/5/2020
Louisiana State University Shreveport
Professor Aadel Darrat
Apple was founded in 1976 in Steve Job’s garage. Since then the company has came out with numerous amounts of innovation and has grown to multibillion dollars’ worth of value. Having produced hits such as the MacBook, iTunes and iPhone, the company now looks to revolutionize the way we conduct everyday transactions with their new service Apple Pay. (Gupta 2015).
Apple pay is a digital wallet that links a user’s credit and debit cards to their phone, watch or another smart Apple device. This allows them to complete payments without physically pulling out a card or entering numerous fields of data into the phone. However, the tech is still new and relatively unused by most people. For Apple to increase the usage with Apple Pay, I came up with three main solutions. These solutions focus around increasing what the tech can do and educating people and businesses on the new functionality. First Apple pay should be usable or at least compatible with other devices and payment apps, second Apple Pay should focus on linking in other things found in wallets. Third, marketing and education of the public.
To be more marketable, Apple pay should be compatible with other payment apps and devices. Apple revealed there is roughly 1.4 billion apple devices in circulation. (Yahoo Finance 2019) with roughly 441 million users having tried apple pay at least once. (Best 2020). Simple math will tell you that’s just over 31% of Apple users. The percentage drops to roughly 9% when it comes to all US Payments. (Rooney 2019). The way Apple makes money off this is that banks give Apple a share of the transaction fee that is charged and in return Apple creates safer and more electronic payments for the banks. (Gupta 2015). With Apple making a percentage off transactions, much the way credit cards do, it only makes logical sense that Apple should want to expand their target demographic.
Currently to use Apple Pay, one must be using an Apple device. Although a user can pay other Apple users, and can pay certain businesses, one cannot transact with other brands of smart phones. (Apple 2020). This can be a rather large drawback in the eyes of many users. Why would one choose to use Apple Pay if PayPal can do this all and more? They are behind their competition when it comes to user to user transfers. To be competitive Apple should release a version for non-apple users who wish to use their product. This is nothing new for the company as products like iTunes can be used on non-apple devices. This would be simple to track progress with , as the company could easily just look at the data of Apple pay being downloaded onto other devices. Although it comes on every Apple product, looking at the number of downloads on other shops such as the Google Play store would be an extremely easy metric to find.
In the debut of Apple pay, Apple’s C.E.O. Tim Cook declared “Our vision is to replace this [wallet] and we are going to start with payments.” (Gupta 2015). Apple has still not accomplished this vision. Although they are getting closer by having added rewards cards to the service, there are still many things the company can do to fully replace the wallet. (Apple 2020.)
A great example of this would be to add a driver’s license/ state ID feature. Not just an uploaded picture, but a way to scan your license much in the way Police do. This would be fantastic incase one is ever buying alcohol, gets pulled over, or tries to fly. Another feature that can go with this would be various permits, Such as a gun or hunting license. If the end goal is to make life for the consumer easier, and to truly replace the wallet this would be a great step. In return this would be a feature that the other payment apps don’t have, creating differentiation and value for the customers of Apple.
One can track how often users, use this feature by looking at number of licenses uploaded, and number of times they use the scan feature. This should go along way to help reach the goal of replacing the physical wallet.
Finally, Apple needs to work on marketing and education of Apple pay. Sure, the dedicated apple users will know how to use the service, but with approximately 1/3rd of apple users engaging in the app, that means roughly 60–70% do not know how to use the app, or even much about it. Apple should approach this with showing the safety and security the app can provide.
With credit card fraud and data mining being an ever-growing problem, Apple pay provided the user some much needed sense of security. Back when Apple pay was first released
Security and ease of access were primary focuses for the company. With features such as a digital code, one wouldn’t even need to switch card numbers if they noticed their card or phone was stolen. They simply would report the card or phone missing and the digital code that would allow transactions would be changed and be able to reactivate without the issuance of a new card. (Gupta 2015.) With most fraud being the fault of the issuer, Apple to increase security came out with a new apple card. The apple card is different as there is no card number, cvv, or expiration date to steal, instead the card is stored and encrypted on the iPhone itself (Brewster 2019).
Nothing quite sells like fear. Apple should capitalize on this very primal emotion. Advertise how safe their wallet can be and show the convenience of not having to enter fields of data with each online purchase. In addition to their security, the company should advertise on how it doesn’t track or sell your data for ads. (Gupta 2015). With entire sites like Duckduckgo dedicated to not tracking data, and the outcry towards Facebook for data mining in recent years, the market for privacy is there. Not only will consumers be enticed by the security, but many will find the privacy a breath of fresh air. Simply compare number of uses on the app and number of Apple card registration before and after the fear-based campaign. This should show a good metric for how well the ad campaign is doing.
In the 44 years of the company, Apple has produced many of great hits. iPad, Apple watch, and of course the iPhone. In the short time that Apple pay has been around, the company has made improvements such as introducing the apple card for added security and the ability to add reward cards. (Apple 2020.) With approximately 1/3 of apple users and 9% of users in the USA using apple pay, the company has a long way to go before they replace the wallet. The steps that will help the company get there would be to allow cross platform transactions to reach a larger demographic, add other elements of the wallet such as Drivers licenses and permits, and to market the security and privacy of the app.
\
References
Apple. (2020, November 17). How to use Apple Pay. Apple Support. https://support.apple.com/en-us/HT201239
Best, R. (2019, September 27). Number of Apple Pay users worldwide 2019. Statista. https://www.statista.com/statistics/911914/number-apple-pay-users/
Brewster, T. (2019, March 27). Millions Are Being Lost to Apple Pay Fraud — Will Apple Card Come to The Rescue? Forbes. https://www.forbes.com/sites/thomasbrewster/2019/03/27/millions-are-being-lost-to-apple-pay-fraudwill-apple-card-come-to-the-rescue/?sh=7aa546a0622f
Gupta, S., Santana, S., & RODRIGUEZ, M. (2015). Apple Pay. Harvard Business School. https://moodle.lsus.edu/pluginfile.php/981931/mod_resource/content/2/Apple%20Pay%20Case%20.pdf
Rooney, K. (2019, August 29). Mobile payments have barely caught on in the US, despite the rise of smartphones. CNBC. https://www.cnbc.com/2019/08/29/why-mobile-payments-have-barely-caught-on-in-the-us.html
Yahoo Finance. (2019, September 3). A brief history of Apple’s payment revolution. Yahoo Finance — Stock Market Live, Quotes, Business & Finance News. https://finance.yahoo.com/news/brief-history-apple-apos-payment 182700212.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAAPL85yQ6exqpRbq1fz7AVtbbofXiBP3SPjwPyizICgNXpjOEj9DeBxTWDsrljl4nm3QOQ_xi9fIxKHuyakpQog3ijk_ivl9KD-scAsQThXI8nWRl12k-sRgs_zCu-og4lnr8FaVhs0qSP3sxTRwpCqj2dsGrSMEAfjlBdSKk2HO