With one recently announced expansion From Apple Pay to multiple retail websites, customers will receive another secure payment alternative to traditional online card payments later this year.
When using Apple Pay, customers will see a “Pay with Apple Pay” button on the retailer’s website, likely featured alongside other payment options (including in some cases an existing “Pay with PayPal” button). Users of Apple devices with the company’s iOS software and Safari browser could use the one-click payment capability, with the transaction sent to the customer’s iPhone 6 for fingerprint authentication using Apple TouchID technology on this device. The checkout process is much faster and more secure than entering card information on the retailers checkout page, and it can be faster than using PayPal, which takes buyers from the retail site to their accounts on the PayPal site for authentication.
However, even with its benefits, migrating from Apple Pay to e-commerce won’t be easy, as it puts Apple Pay in more direct competition with PayPal and others. Launched in 2014, Apple Pay had 12 million users use the app at least once a month starting in March of this year, according to Crone Consulting, LLC, much bigger than Android Pay (six million users at the time) and Samsung Pay (five million). However, at the start of this year, there were over 60 million users of the iPhone 6 alone, with this model being the first to incorporate Apple Pay functionality.
This leaves a lot of room for growth.
Still, observers consider the launch of Apple Pay a success, saying the recently announced expansion was part of the company’s long-term plan and not a knee-jerk reaction to less than spectacular adoption so far. .
“Apple Pay’s in-browser expansion is a logical extension of the service, and one that deepens its omnichannel capabilities,” Jordan McKee, senior payments analyst at 451 Research, told Retail Dive. “The online payment experience is fraught with pitfalls, which helps position Apple Pay as a smoother alternative to entering payment credentials. “
This ability to streamline the checkout process and help retailers avoid cart abandonment means Apple Pay can have a much higher value proposition online than in-store, McKee added. Apple Pay is at a stage where it may need retailers as much as retailers want Apple Pay, as Apple seeks to move beyond its current strength in stores to penetrate deeper into online commerce.
Nature with apple
Much could be said about Apple Pay’s most notable limitation: Buyers need an Apple device, operating system, and browser to use it. PayPal, its most obvious competitor, is available as an app on a much wider range of devices and through any browser. However, Apple has managed to build a mobile empire by leveraging a tightly controlled ecosystem, proprietary technology, and exclusive partnerships. And he seems to want to do the same with Apple Pay.
A first tip in Annapolis investigation conducted in late 2015 found that only around 20% of iPhone 6 users used Apple Pay at least once a month, a figure that had declined by around 2% compared to a survey conducted earlier in 2015 (although the difference is also within the margin of error seekers). Of that user group, 66% had used it for contactless in-store payments, with 52% having made purchases through the app.
Putting an Apple Pay option on retail websites could help the payment option gain popularity.
One of the byproducts of Apple’s closed approach has been a popular reputation for superior security compared to other mobile platforms. These capabilities, including Apple’s fingerprint-based TouchID authentication, are expected to be particularly important in increasing the use of Apple Pay in online retail stores.
Matt Schulz, senior industry analyst CreditCards.com, said that while the gradual addition of EMV chip terminals to retail stores makes payment for goods in physical stores more secure, online retail sites remain an attractive target for security attacks. .
“Biometrics is the future of credit card security,” Schulz said via email. “There is simply too much money at stake for banks, retailers and consumers to continue to rely on old-fashioned security methods like passwords. “
Ultimately, the Apple-only nature of Apple Pay shouldn’t stop it from rapidly expanding into the online retail world. McKee noted that Apple Pay is being integrated into the e-commerce platforms of companies such as Shopify and Demandware, which will allow more retailers to potentially add the Apple Pay option to their payment pages.
“Few retailers want to miss an opportunity to tap into the most valuable subset of smartphone owners,” McKee said.
The initial level of interest shown by retailers in integrating Apple Pay into their websites is a testament to this. Of the retailers mentioned in the Apple Pay expansion announcement, Target declined Retail Dive’s requests for comment.
Fast and secure payment through options like Apple Pay and others is a holy grail for retailers as it can bring many of them closer to the “1-Click Buy Now” feature that Amazon has exploited so well against. the traditional and tedious process. enter credit card information on a retail site. As McKee noted, speeding up this process potentially means fewer buyers could abandon their carts before closing their deals. In addition to these benefits, the state-of-the-art authentication capability for Apple Pay in particular should give retailers much more confidence in the security of transactions at a time when all retailers fear being hacked.
“Making it easier for Etsy shoppers to shop on mobile is one of the ways we support our strategy to make Etsy a daily experience, and Apple Pay is helping us do that with a fast and easy payment option. secure, ”Etsy CEO Chad Dickerson told Retail Dive by email.
“We’ve seen great results integrating Apple Pay into our iOS app and are excited to be able to now extend it to Etsy buyers on the web. “
One to rule them all?
Apple Pay has its advantages, but its ability to dominate online retail payments is far from assured as the payments market has been flooded with new options in recent years.
“In this market, you currently have three models in play,” Richard Crone, senior consultant at Crone Consulting, LLC, told Retail Dive. “You have the stores with their own apps, like Wal-Mart, you have the banking apps, like Chase Pay, and you have other third parties, like Apple, PayPal, Android, Samsung, and others.”
Crone said retailers have launched their own payment apps because they see great potential to combine mobile payments with incentives and promotions that value these options for customers and create more positive shopping experiences.
“It’s not about the payments for them,” he said. “This is the connection point.”
Still, it’s still early in the evolution of the market, and retailers may choose to integrate third-party apps like PayPal and Apple Pay to provide more options for customers.
“There is so much ground to cover that I don’t think a lot of these apps will affect each other,” Crone said. “I don’t think this is a situation where there can only be one.”
A crowded market
However, there probably can’t be as many ways to pay as there are already, if CurrentC’s fate is any indication. The QR code-based mobile payment app was developed by the retailer-led Merchant Consumer Exchange (MCX) consortium, but after months of delays and a system hack during beta testing, MCX recently announced it was switch off the application in beta by June 28.
“Inevitably, there will be a weeding out of the digital wallet space,” McKee said. “Retailers hit a point of diminishing return when they embed too many digital wallet options on their checkout page.”
In this scenario, any payment option that fails to achieve critical mass with both retailers and consumers will be pushed to the margins.
Apple Pay’s expansion has been widely viewed as a competitive blow against PayPal more than anyone else. PayPal, unlike Apple, has had much more success as an online payment option than in in-store point-of-sale systems.
“As an incumbent, this is PayPal’s game to lose,” McKee said.
But, PayPal is unlikely to easily surrender. While Apple is taking advantage of TouchID, PayPal has invested in its own One Touch technology and other new features. While Apple Pay had 12 million users earlier this year, as Crone noted, PayPal had around 184 million active users during the same period, of which 21 million already use its One Touch payment feature. . PayPal is accepted at around 14 million merchants.
And then there’s Venmo, the peer-to-peer payment app with a popular, automated social sharing function, and one next strong millennial market (although the number of Venmo users is not known). So far, almost all of Venmo‘s transactions have been done person-to-person, but PayPal has launched a pilot program putting a Pay with Venmo feature into the existing PayPal app to allow it to be used for other types. transactions.
Crone believes it could help Venmo have wider implications in retail if retailers start targeting Venmo users with special discounts and promotions. Since Venmo is used on retail sites, this information could be shared on customers’ social media (unless they choose to keep it private), allowing additional marketing value for retailers.
“I think Venmo could be the sleeping giant in this space,” Crone said. “As a retailer, maybe you could get a consumer to use Venmo, and then that information would be shared on social media. What retailer wouldn’t want this to happen? “
Ultimately, the markets for mobile payments and alternative retail payment methods in general are still in their infancy. Apple has had great success in the mobile arena which can leverage the rapid rise of Apple Pay to become a central in-store, online and mobile payments. As Apple Pay expands to more retail locations, customers will have more and more choices about how they want to pay for their products. The winner may not be known for some time, but all it takes is one touch to vote.