Apple Pay & Passbook have the potential to be very innovative and disruptive to many everyday user experiences. Apple is able to derive the most economics from getting a cut of credit / debit transactions that are enabled through Apple Pay as well as driving incremental revenues through the burgeoning mobile advertising network. As Consumers view fingerprint authentication technology to be more secure than current swipe transactions. Recent credit card security breaches by Target, Home Depot and various banks add focus to this in the minds of consumers. The ecosystem can be extended further with a win – win solution for all as detailed below.
Integrating Apple Pay with Apple’s iAd mobile ad network in the form of a tap-to-buy button embedded in mobile ads. This would allow app publishers that work with iAd to generate more mobile ad revenues from their apps. Apple keeps 30% of the revenues generated from sales of iOS apps. According to eMarketer, Apple has ~3% of the US mobile ad market, lagging Google’s 37% share and Facebook’s 18% share. We anticipate Apple Pay could drive incremental market share in the burgeoning mobile ad market.
Location Based Offers – iBeacon
According to ZDNet, iBeacon is Apple’s implementation of providing location based information and services to iPhones and iOS devices using BLE technology. The beacons themselves are small, cheap Bluetooth transmitters. Apps installed on your iPhone listen out for the signal transmitted by these beacons and respond accordingly when the phone comes into range. For example, if you pass a beacon in a shop, the retailer’s / product manufacturer’s app (assuming you have it installed) could display a special offer alert for you if you pay with Apple Pay.
Apple’s sticky and loyal iPhone user base (~300 mln global iPhone users, ~100 mln iPhone users in the US based on prior 2 year unit sales of iphones and over 800m iTunes user accounts globally) make it a ripe population for a loyalty program, Apple Rewards, which could entice users to pay with Apple Pay. Some media blogs are reporting the launch of Apple Rewards this holiday shopping season to spur the use of Apple Pay.
Hotels Keyless Entry
Apple and NFC technology has the ability to completely replace the physical key and hotel registration & check out process. Apple Pay users will be able to check in (and out) with their iPhone and even adjust their room selection before stepping into the hotel and completely bypass any hotel in person check in process thereby saving the hotel valuable labor costs at the registration and check out desks as well as completely paperless transactions.
Personal Home Entry
Phone enabled keyless entry systems could gradually be adopted for entry into homes enabling remote entry when the resident is not home.
Replacing Security Access Keys, Car Keys etc
Security work access cards are actually quite unsecure as its common for employees to lend their work access cards to others. This is unlikely to occur with smartphone fingerprint technology which can also be more easily adjusted for changes in access rights. Physical keys and remote keyless entry systems for automobiles could become obsolete with smartphones being the new key. There are not major technology hurdles for this to occur as much of the technology is already embedded in the key fob technology today that is being deployed. Furthermore access to cars could be easily transferrable to give others access to a car such as a family member, friend, repair person, etc.
This will definitely evolve but not sure if Apple will be the Leader who will make this happen though they have established an early lead.