A more interesting use for Apple Pay

Pascal-Emmanuel Gobry
15 September, 2014
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wallet-thumb-macworld-ausDid you know Apple announced some phones last week? Did you know Apple announced a watch last week?
Those aren’t actually the most interesting announcements Apple made last week, if only because they were mostly expected.

Unexpected but was much more interesting was Apple’s new payments service, Apple Pay.

Apple Pay is a standard mobile wallet solution like Google Wallet and Square and similar offerings from companies like PayPal. Wave your phone at the counter and presto! You’ve paid. Apple is touting its user experience and higher security as a selling point – with Touch ID, your fingerprint is your identification.
Will it take off? Who knows, it’s Apple.

The reason why it shouldn’t take off is because mobile wallets are a geek fantasy that doesn’t solve any actual problem that real people have. Swiping a card is every bit as convenient as waving a phone. A phone that is just like a credit card except it doesn’t work when you run out of battery is not a compelling value proposition.

At the same time, Apple has a magic for confounding expectations and making people love stuff that seem totally superfluous a priori.

But that’s not actually what’s most interesting about Apple Pay.

What’s most interesting about Apple Pay is what it could yet become – a one-touch payment system for everything.

After all, believe it or not, Apple doesn’t just make mobile devices. It also makes computers. And it also makes a browser.

One thing that the web has lacked from the beginning has been one-click payments inside the browser. Marc Andreessen, the inventor of Netscape, reportedly said that it was on the feature to-do-list and somehow slipped through the cracks in those crazy days in the 1990s.

We have been trying to come up with hacks and tricks and solutions to figure out online payments, but never with much success. It pretty much only works on Amazon – and in the Apple App Store. That has decimated the web. Think of how much one-click payments have changed the economics of mobile apps versus the economics of the web. Because paying for stuff is easy and not a hassle, people are much more willing to pay for things. Things like micropayments become possible, and are the basis for very large businesses.

The internet’s lack of a built-in one-click payment solution has actually been very harmful. We’ll never know what kind of internet we would have gotten with it.

It’s certainly been very harmful for media, which are basically forced to rely on a free model, in brutal competition with the rest of the web for the Incredible Shrinking Banner Ad Dollar. That, in turn, has had an impact on public discourse and democracy.

But this isn’t just about Big Media. I know several independent bloggers who have a PayPal tip jar on their blog and make a few hundred dollars from it. I wouldn’t be surprised that if people didn’t have to go through PayPal’s awful payment flow, they might donate twice or even triple the amount. That goes from paying you a cup of coffee once in a while to actually being a noteworthy supplemental income. If more indie bloggers can make a living from their writing, we all benefit.

It’s also probably been harmful for ecommerce. Ecommerce is certainly doing better than media, but it’s still the case that in ecommerce, a change in conversion rates of a couple points can boost your revenue by double-digit figures (and your margin even more, given often high fixed costs), and making payments even more intuitive certainly might deliver that increase in conversions. Who knows what business models that weren’t viable before would become so?

Another industry that would obviously benefit would be online games.

The point is this: Apple Pay doesn’t have to stop at being a mobile wallet. Every newer version of Mac OS X brings more and more integration between Mac OS and iOS, which makes sense both from a user perspective and from a strategic perspective (use your phone userbase to sell computers and vice versa, lock people into your ecosystem). It probably won’t be long until Apple Pay isn’t just integrated in Apple Passbook, but also in Safari – both mobile and on the desktop. That would instantly give the service hundreds of millions of users. Which, in turn, would mean that a lot of online retailers would be interested in integrating it.

The point isn’t that PayPal should be worried (although it definitely should). The point is that we see a glimpse of, finally, a pleasant online payment experience. And that not only will this make us happier, but, if it happens, it will actually reverberate in untold ways and change a lot of the internet as we know it.

3 Comments

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  1. JeremyB says:

    If I understood the announcement correctly, Apple Pay relies on hardware on the phone to store your credit card information in a secure manner. So I don’t think this will be appearing in OS X or Safari without the supporting hardware. (Maybe we’ll see it in the next round of iMac & Macbook updates?)

  2. Russell says:

    You say that waving your phone is no different to pulling out and waving your credit card but you miss one of the most important features of Apples new Apple Pay !

    When using Apple Pay no one every sees your credit card , your credit card number, your card name or your 3 digit security code on the back of card.

    Every time you give a card to a cashier to swipe etc your compromising your card details.

  3. Jen says:

    I agree it’s the same pain delving into a handbag to pull out a phone as it is to grab a wallet with credit cards. The security aspect does make the phone slightly more superior but far more convenient than both is the AppleWatch. No more delving into anything. Just hold up your wrist.

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