In the tug of war between technologies, merchants, and consumers, who will decide the future of payment methods?
Consumers have been warming up in recent years to the possibilities of conducting more of their financial transactions from their smartphones or tablets, including banking, peer to peer transactions, online shopping, and so-called digital wallets.
It’s still uncommon enough to be novel, but not exactly shocking anymore to find yourself in a coffee shop with an iPad installed where the cash register once stood, or paying for your ride via a mobile app like Uber or Square.
The coffee-shop-frequenting, Uber-using demographic is right in Apple’s sweet spot, so it’s only appropriate that they made a big splash entering the mobile payments game with the Apple Pay launch this fall.
Apple Pay’s chief boast is the use of Near Field Communication (NFC) to reduce the act of paying for something to a basic gesture. At compatible retailers and points of sale, an iPhone 6 user simply holds the device near an NFC reader with a finger on the Touch ID to provide fingerprint authentication. The phone beeps and vibrates when the transaction is complete.
Apple Pay also functions as a digital wallet for in-app purchases for an impressive array of retail and branded apps. This seamless integration of the digital and offline user experience in a single product is likely to encourage adoption among the already-loyal Apple fanbase.
Indeed, Apple CEO Tim Cook confirmed that in the first three days after the announcement of Apple Pay, it had already netted over 1 million activations.
Still, the roll-out was not without its hiccups – or as Cook labeled it, a “skirmish.”
A group of retailers invested in a competitive product called CurrentC got some unfavorable press when select locations of major national chains blocked Apple Pay.
The Merchant Consumer Exchange (MCX) includes Best Buy, Walmart, CVS, and RiteAid, among other notable names. CurrentC relies on the exchange of QR codes at the point of sale, in the interest of not storing any payment information on the phone itself as a security measure, and was due to roll out in 2015.
But in October as Apple Pay rolled out, some of these retailers made headlines by blocking Apple Pay and other NFC-based apps like Google Wallet. Some refused to accept those payments while others turned off NFC capabilities entirely.
MCX CEO Dekkers Davidson recently spoke at a news conference to clarify that this was not a mandate from the consortium nor punishable by fines, but the choice of the retailers themselves. In a followup interview to the conference, COO Scott Rankin explained to Business Insider that retailers would have to leave MCX if they wanted to accept Apple Pay.
When asked for his take, Apple’s Cook alluded to the future of mobile payments – “Merchants have different objectives sometimes. But in the long arc of time, you are only relevant as a retailer or merchant if your customers love you.”
More than the technology, that’s what this skirmish is about: relevance. Whatever form mobile payments end up taking, no one is denying that they’re coming fast, and no one wants to be the last one to the table.