So, Why The Big Hype Around Apple Pay?

October 20, 2014 by

Wow. What a month in the world of mobile payments.

So much has been said and written since Apple Pay was announced on September 9th, up to its official launch today. If I had dollar for every time Apple Pay was mentioned in the press and in blogs, well…

But Apple Pay isn’t the only thing that has happened since September 9th. There has been a lot going on around the globe:

  • Paym, the bank-backed mobile payment service that launched earlier in the year in the UK, has signed up an additional 20 participants, taking the number of represented customer accounts to 30 million, with 10 million more to come.
  • VocaLink-backed Zapp announced a 2015 rollout of real-time mobile payments (in store, online and through apps) in the UK, running on the Faster Payments rails. Leading bank and retailer brands, representing some 35 million people, have already signed up.
  • New Zealand Banks ASB and BNZ are joining forces to launch a new national mobile wallet, branded Semble. And nearby Australia has seen significant advances in mobile payments.
  • EBay announced that it will spin off Paypal into a publicly traded company in 2015. PayPal processed $27 billion in mobile payments volume in 2013 and expects to process 1 billion mobile transactions in 2014.
  • In India, Kotak Mahindra Bank has launched a mobile money transfer service for Facebook friends. It’s bank agnostic, it taps into India’s Immediate Payment Service for mobile phone payments, and the funds are instantly available to the recipient. And we’ve heard that Facebook themselves are working on mobile payments.
  • In Italy, payment processor SIA has launched a mobile money transfer service that allows users to send money to their contacts instantly. They’ve already signed up banks representing 60% of the local market. But get this – the system is SEPA-compliant, meaning it could roll out to 400 million European account holders. It also happens to work on Android, iOS and Windows Phones.
  • And Africa has seen some significant events playing out. Equity Bank in Kenya is directly challenging Safaricom, the organization behind M-Pesa, and in September was granted permission by the Communications Authority of Kenya to roll out a competitive offering to what is the most successful mobile person-to-person payments platform the world has seen.

So why the big hype around Apple Pay? What makes it so much more newsworthy?

It’s Apple.

Ok, ok, fair point. But wait, Google tried that with their wallet, and the brand alone didn’t manage to carry it through. In fact, wasn’t it Google that initiated the downward slide on the Gartner hype cycle for mobile wallets? So why the big excitement now?

There is something in this that is hard to pinpoint. Perhaps it is Apple’s track record of delivering great products that people didn’t realize they needed, then can’t live without. Perhaps it is their attention to simplicity and style, which makes the concept of making a mobile payment in a store less threatening for the mobile novice? It surely has something to do with their ability to sign up banks representing a majority of cardholders in the US initially, followed by the addition of a further 500 in time for launch, not to mention an impressive list of retailers. They’ve taken a gentleman’s approach in how they’re working with the leading card associations, the banks and the retailers, and maybe this gives everyone just that extra bit of faith in the potential for success. And of course, it’s only a matter of time after the US rollout gets underway that Tim Cook will turn his eyes eastward.

Certainly one of the things that Apple is good at, is building anticipation and enthusiasm at the right time. Many organisations announce, in year 1, that they are building something for launch in year 2 (or later). Apple typically announces something new pretty much as it becomes available, or close.

But for every observer looking on with excitement and anticipation, there is a detractor. And there certainly are some strong points being made to temper the hype. For me, the biggest question is whether this move, while significant, is too small a step. It’s a bit of an old argument that making a payment with a card is not really that hard, so the focus on the ease of payment, while in keeping with Apple’s attention to an elegant user experience, was a weak point in September’s keynote. It was really this aspect, as well as the list of blue-chip participants and the addition of security through tokenization, that characterized the Apple Pay announcement - but there wasn’t anything revolutionary. Some would say that it was necessary to take a smaller step first, to allow the average consumer to absorb the change - I guess time will tell. But for many the lack of any plan for loyalty, rewards, location-based services and other value-adding integrations is a big miss. And then of course there are the questions around the financials - what’s in it for the banks and the retailers? And, in fact, what’s in it for Apple - a company that makes far more money off selling devices in a quarter than it could conceivably be expected to earn off Apple Pay in the next two years.

Indeed, these are some significant challenges. Is Apple ultimately betting too much on the strength of it’s brand? Or is this the first step in a carefully crafted strategy to change the infrastructure of payments forever?

Whatever the answer to these questions, today is a day where they will all be pushed aside as those consumers who are lucky enough to already own an iPhone 6 rush to participating retailers and try out their new payment capability. We can get back to the questions and take a closer look at all the other mobile payment offerings tomorrow, because today is most certainly Apple Day.


John Gessau, Director, Product Management, ACI Worldwide
John leads product management for ACI’s mobile payments solutions. Before ACI Worldwide, he was Head of Architecture for the Africa Business Unit of S1 Corporation. He also held positions at Postilion and Mosiac Software. John is based in South Africa.

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