Tech Guest Viewpoint: Three Things That Could Stall Apple Pay in 2015

By Jim Maholic, Hitachi Consulting



Apple’s new mobile wallet solution, Apple Pay, was introduced to great fanfare as shoppers headed into the 2014 holiday shopping season armed with the new iPhone 6 and iPhone 6 plus. Apple was quick to proclaim its success with one million activations in the first 72 hours – instantly vaulting it to the top, according to Tim Cook.



But the top of what? Data indicates that while it took nearly a year for Google Wallet to reach 1 million activations, the service had reportedly surpassed 10 million downloads sometime in early October 2013 – nearly a year before Apple Pay was introduced. Let the bragging wars begin.



Downloads and activations, however, are not the same as active users. Studies show that only 16% of consumers try a new app more than twice, and apps don’t typically change the way users need to interact with a retailer every day. More intriguing still, beyond the activation-to-actual-use debate, there exists another phenomenon that has yet to be accurately captured: the link between apps, a physical retailer and the customer experience.



This kind of information would help close the tremendous gap between being an active user and being a truly delighted user. Without a grasp on that nuance, retailers will remain skeptical to embrace mobile wallets as consumers default back to simply handing over a credit card or cash at checkout.



Will Late Adopters be Frustrated?

It will be telling to keep an eye on “late adopters” and store operators as Apple Pay and competitors seek to promote adoption and gain a foothold in 2015.



Let’s look first at the non-users or late adopters. One of the big energy killers in shopping is waiting in long lines to check out. If “early adopters” of mobile wallets are fumbling with their devices or experiencing any technical difficulty, checkout lines will slow to a crawl. Traditional shoppers will quickly voice their displeasure with being inconvenienced, damaging their experience with the retailer. The worst-case scenario for any retailer is ready-to-purchase customers abandoning their shopping carts and just shopping somewhere else.



And bad user experiences don’t sit idle; they spread on social media, damaging the retailer’s image and influencing other shoppers to stay away.



Will Retailers be Advocates or Obstacles?

Let’s look at the second population, retail store operators, who should be ever-vigilant about the customer experience. Store operators will keep a watchful eye on the ease-of-checkout (or lack thereof) that these new technologies introduce in their stores. How will they respond? That may depend on factors completely out of their control.



Technology Barriers: From Data Coverage to Legacy Systems

Apple Pay proclaims that it does not need an Internet or cell connection for its users to complete a transaction, while Google Wallet users need adequate cell coverage for their phones to access their bank data to verify and execute transactions. Any disruption or heavy data demand could slow or interrupt the transaction – and that won’t sit well with retailers.



Questions also arise about the impact on back-end financial systems of these new payment approaches. Fundamentally, Apple Pay, Google Wallet, and others are simply different payment processing methods. Yes, the IT organizations that support store operations might need to make certain software or configuration adjustments and run appropriate tests to ensure transactions are successful. But the action to watch will be the non-users and store operators as these technologies work out the first-mover kinks on their way to becoming mainstream payment methods.



Don’t toss your leather wallet away just yet.



Jim Maholic is VP of Hitachi Consulting