Credit cards became an instant success because they removed the friction in purchasing and created unbelievable value for consumers. In simple economic terms, the benefits of credit cards exceeded the costs. For Apple Pay to succeed, in needs to do the same. After a few weeks of using Apple Pay, here is what I found.
- Most businesses still don’t support it. I live in a large college campus, and none of the businesses in the area support it. Of course, this is not Apple’s fault, and the liability shift in 2015 should fix this, but consumers don’t care who's fault it is. They just want it to work.
- When the retailer does support it (the ShopRite, Wegmans, and Walgreens near me all support it), the technology is glorious. Payment is quick and easy. There is no need to carry a wallet with me. I feel like value is created because I can get in and out of the store quicker.
Most major banks and credit card issuers already support Apple Pay, but it’s the merchants who are holding out. I won’t delve deep into why, as Ben Thompson already covered this topic, but the effect is nonetheless the same: consumers are not able to use Apple Pay everywhere, seriously diminishing its value. Meanwhile, the merchants are also creating a mobile payment solution, a cute play on words called CurrentC, but it’s unlikely to gain any traction.
Despite merchant opposition, I predict that Apple Pay (and Google Wallet, for that matter), will become the victors in the mobile payment space. Every iPhone 6 and 6 Plus comes with a NFC chip that enables Apple Pay, as will future all Apple devices. Consumers will come into stores wanting to use them, and the stores will budge. At the end of the day, it's money we are talking about, and merchants will accept it in any way possible.