Apple is set to enter the mobile payments arena after the US Government approved a patent for a mobile wallet app.
A conference in London last week heard how the manufacturer’s entry into mobile payments could transform the sector. David Hodgkinson, principal advisor in KPMG’s customer and channel management practice, told delegates that mobile wallets were expected to reach mass adoption by 2016.
Hodgkinson said retailers could be reluctant to invest in the technology given the challenges facing the high street, while consumers remained to be convinced about its benefits. He said there were also concerns about security as well as ubiquity. ‘It’s a chicken and egg situation. Retailers will invest if they believe it’s something customers want, but at the same time, they cannot generate that interest if consumers cannot use it,’ he said.
Apple operates a system in the US called EasyPay, where a customer can scan lower cost items stocked in an Apple store through their iPhone and pay for them via their iTunes accounts.
Hodgkinson praised the ease of this system and said Apple’s entry into the market could be a way of speeding up mass adoption. He said: ‘Apple is not a data company or a bank but it has 200 million cardholders’ data. It could launch with something very simple to use. It won’t try to make money off the data and will provide a very simple payment mechanism. If you think about ubiquity, a very simple solution could really work.’
The conference was hosted by digital banking provider Intelligent Environments, which is working with O2 on its forthcoming mobile wallet. It conducted a survey with 11 companies involved in the mobile payments sector including Microsoft, Lloyds and O2, and found over half of them believed the UK lagged behind many of its European counterparts and the developed world in offering such a service.
Intelligent Environments’ director of mobile James Richards said: ‘Some [UK] offerings are not as customer driven as they need to be and some are probably too functional. This is a very hot space at the moment but there is the feeling that businesses can do better. A lot of countries, particularly in Asia and the United States, are some way ahead.’
Richards claimed that partnerships between banks and telecoms companies were the best way to ensure mobile wallets catch on, citing Vodafone’s relationship with Visa Europe. However, Hodgkinson added: ‘The question needs to be asked about what operators are bringing to the transaction. They can easily grab a share but they don’t add a huge amount of value compared to the total payment. O2 is fantastic at consumer branding and working as a service company with Priority Moments and the like, so [telcos] could strike a balance.’