Apple Pay: this could be start of something big

In the days of Steve Jobs, Apple cynics often referred to the Reality Distortion Field when confronted by Apple keynotes. There were two reasons for that:

  • they couldn't understand how Apple created such hysteria with products that weren't really revolutionary
  • they couldn't understand why these evolutionary products were actually revolutionary.

Apple Pay is the latest example of this and I think it's going to be huge. 

Firstly, some history. Google released Google Wallet in 2011. If you look at the Google Wallet page now and read through it, you'll notice that it has many of the same features that Apple Pay has although Google struggled to sell me on what's in it for me. It lets me take all the gift cards out of my wallet by loading them into my Google Wallet, but then I also need to add a Google Wallet card into my wallet. It's sort of a Google bank account that I can send and receive money with by loading money in from...my bank account. But I've already got a bank account. And a PayPal account. And I don't need another one.

It's just not a compelling story for the customer. What's the problem that you're trying to solve? I don't really know. And how does the solution make my life better? I don't really know.

Apple, with their Reality Distortion Field, have described the problem and shown me how they plan to solve it. I can easily pay money using my credit card while only taking my phone with me. The card number is removed from the process to help make it more secure if I lose my phone.

This is a subtle difference from Google Wallet where I need to load money into a service that I don't even know if I'm ever going to use. Or that might shut down like Google Reader, or Google Buzz, or Google Wave. 

This isn't an RDF, this is simple marketing. Create a simple and compelling story for the customer about why the service is useful. Google has created a compelling story of why the technology is cool, but not why the service is useful.

There doesn't seem to be a compelling reason to sign up for Google Wallet because it isn't as frictionless as Apple Pay. Also, they key technology, NFC tap-to-pay, might not even be available on any given Android phone.

Apple makes it easier because if Apple Pay is shut down in the future, they don't have any of my money stored that I would then need to reclaim. Apple is working on having a relationship with my bank or credit card provider to make it easy to set-up and use. Plus, they already have my credit card on file for iTunes, so I don't need to give them any more information than they already have.

Apple also provides additional security in the form of Touch ID. Not only can I cancel the credit card from Apple Pay if I lose my phone but the cards can't even be used without a fingerprint. This is better security than my credit cards. 

I'm a little unclear on how Apple makes money out of this. Is it simply doing this to make the iPhone platform more attractive? I'm just not sure.

This is a useful service for customers and is likely to slowly gain users and transactions over the next few years.

At the moment, this is something that only Apple or Google could pull off. Google couldn't manage it but I think Apple has got a shot.