Begun, The Mobile Payment Wars Have: Part 4

A few things that characterize mobile payments are early stage experimentation and standards battles. That’s to be expected in any embryonic sector.  There’s NFC, mobile card readers, POS hardware that scans the barcode on your screen (a la Starbucks), to name a few.

Sometimes the mobile device is on the payers end, like like PayPal’s new app; and sometimes it’s on the receiving end like Square. All the nuance, standards and differing use cases are too often lumped together as just “mobile payments” by generalist media and linkbait headlines.

To cut through a lot of this clutter, we released a report recently on the state of the union in mobile shopping and payments. One of the many standards that will vie for consumer adoption, appeal and comfort levels is what Apple is likely to unveil for purchasing physical goods.

This is an outlook I’ve been arguing for a while, which was affirmed last week by Tim Cook’s earnings call statements and some WSJ digging. The idea is roving transactions throughout retail stores by scanning items with an iPhone and paying with iTunes. No checkout aisle required.

Apple has long been a sleeping giant in mobile payments for physical goods. It already owns the consumer touch point (375 million iPhones) and payment processing (600 million iTunes accounts). And for a while it has employed a version of the model outlined above in its own stores.

The next step is to push that out to other retailers. It’s perfect for places like IKEA: scan an item, pay with iTunes, grab it from the warehouse, and be on your way. The plot has thickened since my original prediction with iTouch (payment authentication) and iBeacon (lead you through the IKEA maze).

Of course there are lots of moving parts such as security, parallel standards (like iBeacon), and most of all retailer relationships. The latter could be sticky but if there’s anyone with a proven ability to partner with industries that its in the process of upending, it’s Apple.

My colleague Suzanne Ackley covered more of last week’s developments and related BIA/Kelsey data. And over the weekend I unpacked some of the possibilities at Huffington Post. Check it out and let me know if I’m crazy. Or if you want to engage over the topic, that’s what we’re here for.

 

This Post Has 2 Comments

  1. Peter Krasilovsky

    Interesting piece, For retail, doesn’t Apple run into the same problem as telco charges (i.e. 30 percent commissions?) That level will only work when it is operating the store (i.e. iTunes).

    For sure, Apple’s got to develop incremental, non-store pricing. If it doesn’t, it will end up the same way as the telco charges (which really could have owned this space in the 1990s, when telcos were branching off from calls to things such as campground reservations).

  2. Mike Boland

    I agree. If they go this route, it won’t be for the payment processing fees. That would be very un-Apple. Instead i think they’ll do it for the same reason they do lots of stuff– to sell more iThings which is the core of their business and where they make their margins (similar to this argument http://blog.biakelsey.com/index.php/2013/08/12/fixing-apple-maps-its-about-selling-more-iphones-not-local-advertising/).

    The other reason would be for all of the rich purchasing data which would empower them to push iAd and other content in relevant ways.

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