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Apple’s Wallet-Without-Payments: If This Works, Maybe We’ll Try The Hard Part

Written by Frank Hayes
June 14th, 2012

Apple’s announcement on Monday (June 11) of Passbook, the iPhone’s mobile wallet that does everything except traditional payments, is a classic unthinkable move: Apple did the easy part first. If customers like using Passbook for tickets, coupons and loyalty cards, then maybe Apple will tackle the hard part: mobile payments.

There are several ways Apple could do that. But one thing seems clear: After the fruitless straining of Google Wallet, ISIS and PayPal to get customers and retailers on board, Apple’s design philosophy of “it just works” means the impact on retailers of iPhone mobile payments should be nearly invisible—except that customers may actually use it.

The announcement this week was only a small part of the forthcoming upgrade to iOS, and Apple executive Scott Forstall didn’t mention NFC. Instead, his demo showed Starbucks and Apple Store cards, Target coupons, and Amtrak and United Airlines reservations. He also mentioned an API to let third parties add payment functions—as long as, like Starbucks, they use 2D or 3D barcodes.

This is Apple’s long-awaited entry into mobile wallets? No tap-to-pay, no deals with retailers or processors or banks or card brands or carriers? Of all the smartphone vendors, Apple has the most clout with all the players it needs to line up for mobile payments. And sure, Google and ISIS and PayPal are looking like non-starters with users, but if Apple offers it, Apple’s fanatical customer base will use it—right?

That seems to be what Apple is trying to find out. Apple is paradoxically a lot less confident of the Apple Effect than many retailers and most mobile-payments pundits. Apple is also a lot less confident in the whole idea of mobile wallets than Google, ISIS and PayPal. The best reason for that caution: the mobile-wallet experiences of Google, ISIS and PayPal.

Not everyone shares that hesitation. The same day Apple was announcing its wallet-without-payments, the smartphone blog Android Central published slides that seem to confirm that Sprint is working on its own Google Wallet-like system, right down to the tap-and-PIN approach. That’s yet another pain point for Google, if it becomes a reality, because Sprint is currently Google’s only official carrier partner.

An earlier story, published on June 7 in NFC Times, suggested Sprint could launch its own mobile wallet as early as this summer. But Sprint hasn’t announced anything, and this yet-another-wallet may never officially see the light of day. The obvious question: If customers don’t use mobile wallets from Google or ISIS, why will they use the same thing from Sprint or anyone else?

Apple’s answer to that question: Make the easy parts of a mobile wallet. Unveil them as a very small part of a much bigger announcement (say, how ’bout that new MacBook Air and turn-by-turn maps?). Then see whether users jump on the new wallet feature enthusiastically—Apple Effect or not—before Apple dives into the payments problem. It makes Passbook an elegant first step into what has turned out to be one of the most swamp-like problems in retail.

If it doesn’t work—if the Apple Effect is a myth in mobile payments, or iPhone users just don’t see the point—Apple can quietly scrap any mobile-payments plans it has in the works (which it does, with a whole string of related Patent applications under its corporate belt) and go on to something different.

Apple’s unstated point: Everyone else is doing it backward. The payment comes at the end—if it ever comes at all.

But suppose iPhone and iPad users love Passbook. How can Apple go after NFC payments?


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