Disclosure: This is a Guest-contributed Post
In the early part of the last decade, when everyone was carrying blackberries and phones, the big buzzword was “convergence.” We couldn’t wait to have our phone mashup with our email device and carry just one electronic gadget that did both. The iPhone launched and, though Blackberrys had added phone capabilities, this was true convergence as you could do email, browse the web, make phone calls (sometimes depending on AT&T), and listen to music. This was the first widely adopted and functional “SmartPhone”.
We’re still looking for that great convergence of your Smart Phone with our wallets and every Apple release is preceded by rumors of Near Field Communication (NFC) and mobile wallet. Here are the reasons why as much as I’d love to ditch my George Costanza-sized wallet for one device, this isn’t going to happen this year:
1. Stores don’t take NFC
Sure there are some stores that have NFC terminals, but those account for about 2% of all terminals world-wide. For those drugstores like CVS and Duane Reade that do have NFC, it’s painful to watch a clerk try to be helpful when they have no idea how the technology works. Apple won’t ship a phone with NFC payments that only works in some stores, some of the time.
2. It’s not Globally Equivalent
When Apple ships a product it generally is the same product around the globe. There aren’t iPhone 4x’s in Singapore and iPhone4z’s in Germany. The world gets the same platform with a few modifications to radio frequencies. Sure, they add currencies and countries to iTunes over time, but a core capability always ships around the globe within months.
3. Apple isn’t first to market
Remember the Creative Nomad Jukebox. Most of you won’t, but this was one of the many MP3 players that launched before the iPod . How about the Treo mobile phone and email device. Apple is notorious for not being the first to market with a piece of hardware, but when they launch getting it so right that it blows everyone away. There are plenty of people trying to do NFC like ISIS – the consortium of carriers, MCX – the consortium of merchants, Google – the consortium of Google. Apple is happy to wait and watch how they fail, let them educate the market and spend to “terminalize” stores and then swoop in many years later with an updated PassBook that you’ve been using to go to concerts, movies, board airplanes, etc.
4. Payments is messy
Payments is a complicated beast that has so many hands in the cookie jar of a transaction taking their crumbs that it’s hard to distinguish from beltway politics. When you think of where apple would fit in the ecosystem, they closest you get is a PayPal solution for online, where they can set the merchant discount rate. At the store, unless they became their own payment mark (not happening in 2 weeks), then they’d be riding on someone elses “rails” (Visa, MasterCard, Discover, Amex). Sharing in this transaction with a partner upon whom they’d be reliant is not a very Apple thing to do. They own customers and ecosystems. They don’t share so well. Also, payments is a high-touch, customer complaint wellspring. Without accruing a lot of value to Apple, it doesn’t seem likely they would work to add this without nailing all the other promotional goodness that would yield benefit.
5. Apple isn’t an advertising company
The real money is in promotions and advertising where you don’t take .05% of a transaction,but get to take a bigger chunk by delivering a lead or changing customer behaviour. In previous efforts around advertising, Apple hasn’t had the stomach for these messy and high touch endeavors. Look at iAd and why you don’t see Apple competing, seriously, with Google or even Facebook on that front. They make software and hardware. They generally aren’t great at services.
6. Swipe isn’t broken
Finally, Apple likes to create step-change in consumer experiences. Swipe isn’t broken, nor does tap add that much ease of use and simplicity. Anytime I’ve stood behind someone trying to pay with their mobile phone, I watch as customers get mad while they try and open the payments app, enter the pin code, and wait for the clerk to understand what’s happened because they didn’t hand over a credit card or cash.
So, while Apple may launch a neat way to share songs or photos using BlueTooth LE or NFC, or greater enhancements to their ecosystem of entertainment like a more robust remote for your apple TV, I don’t see payments coming anytime soon for physical world transactions.