Why is Apple Pay going to dominate the mobile payment market?Apple Pay, in my opinion, is a vastly superior product to the CurrentC app being pushed by MCX. There are several reasons that I believe users will want Apple Pay and will blatantly refuse to use CurrentC:
Apple Pay protects users by requiring the user's fingerprint.Apple Pay uses tokenization to protect users.NFC is a vastly superior technology that allows users to pay immediately, rather than unlock their phone, log into an app, scan a QR code, etc.Apple Pay does not require your social security number. CurrentC does. Remember, this is a company that just admitted that their accounts were hacked, that they take security seriously, and that it isn't their fault. The blame belongs, per management, on an unnamed service provider.Apple Pay allows users to use an existing credit card.CurrentC wants users to connect their bank account, a major security issue.CurrentC wants to track data on users for marketing purposes.Some of those issues are very big. If a business wrongly charges my credit card, I can easily dispute the charges. If a business wrongly charges my checking account through an ACH transaction, I can only dispute the charge directly with the business that created the charge. If the business did not feel like refunding my money, that would be the end of my appeal process. I do not believe consumers in large numbers will agree to use ACH transactions to pay for items or services. Even if consumers were willing to accept that, charging a checking account requires consumers to have money in the checking account. According to CNN, "the average American household with at least one credit card has nearly $15,950 in credit card debt." Quite frankly, I don't think retailers want to restrict their sales to the consumers that have money in their checking account.
Apple needs the revenue growthAccording to Forrester Research, the market for mobile pay may jump to $90 billion by 2017. In 2012 the market was only $12.8 billion. That could be a very important growth area for Apple because its top line revenue growth has been stagnating as shown in the charts below:
The biggest challenge for Apple PayMerchants are resisting Apple Pay for a few reasons, but one of the major ones is the cost of transactions. While credit card processing fees typically run around 2% of a transaction, an ACH debit can run for as little as $.12 per transaction. On larger transactions, that would be great for the margins at major retailers. While retailers have backed MCX because the app builds in most of the things they desire, such as removing a customer's ability to forcibly dispute charges and the higher fees associated with credit cards, Apple has targeted its product directly at the end user.
Benefits of the Apple strategyBy designing a product that met the consumer's needs, instead of the desires of retailers, Apple ensured that their product would get positive coverage from word of mouth. The process is slick and cool. The younger generation will want it because it is fast. The older generation will want it because it is secure. Privacy enthusiasts want it because the system is completely anonymous. Merchants cannot store data on customers. Marketing is not necessary. People won't be able to avoid hearing about the benefits of Apple Pay.
On the other hand, MCX will face an uphill battle at every step. While Apple Pay is already in use, MCX has failed to deliver a single reason for a customer to want to use their app.
ConclusionApple Pay is delivering everything customers look for and the timing couldn't be better. When Apple needed to boost sales, an entire new market is being developed. That seems to be the trend for Apple. Every couple years they announce that they have developed the thing that we didn't know we needed. Apple has been consistently right, and I think it is right again. This may be the next driving force for the company. I anticipate Apple having an enormous market share in the new mobile payments market. |
