Goldman Sachs thinks Apple Pay has the power to change the payments industry. In a short time, the product has gained traction with consumers and retailers alike. So far, the competition can’t keep up and it seems that Apple Pay will be the go-to mobile payment product of the future. Retailers looking to maintain their competitive edge should make sure they have systems that accept payment from the technology.
“The popularity of Apple Pay is evidenced by the amount of media coverage it receives.”
Retailers and payment processors like Apple Pay
According to Benzinga, Goldman Sachs looks fondly upon Apple Pay. Analysts at the investment bank said Apple Pay has “solid merchant traction,” referring to the 700,000 retail locations in the U.S. that currently accept the technology. The analysts also recommended that Apple introduce a loyalty and rewards program to boost adoption rates and influence consumer behavior patterns. It has not been long since Apple launched its payment product, yet Goldman recognized it is “clearly having an early impact on the mobile payments industry.” Part of that growth is due to Apple’s ability to secure relationships with credit card issuers like Visa, MasterCard and American Express. The news source mentioned that the company recently added support for Discover Financial Services as well.
The popularity of Apple Pay is evidenced not only by the amount of media coverage it receives, but also by how many other technology companies are creating products specifically tailored to accommodate for the product. The Next Web recently reported on payments processor iZettle, which has launched a new card reader that allows merchants to easily accept Apple Pay and other contactless payment methods. iZettle is largest in Europe and was founded in Sweden, but operates in France as well. It is important to note that many U.S. companies offer sophisticated point of sale devices that not only accept mobile payments, but also allow companies to better manage their sales platforms and transaction information databases. Apple Pay requires NFC-enabled sales terminals – any merchant or retailer looking to stay competitive should make an investment in the necessary infrastructure.
The competition can’t keep up with Apple Pay
Investor’s Business Daily recently reported that MCX, a consortium backed by major retailers like CVS and Rite Aid, is losing some of its members to Apple Pay. The retailers in the MCX famously turned off their NFC devices and indicated that they would develop their own mobile payment app – CurrentC. Their primary intention was to avoid paying the transaction fees associated with credit card purchases. Cash purchases are more lucrative for retailers, but denying customers the ability to choose their payment method has its own cost as well.
Best Buy, initially part of the MCX, will be joining Apple’s list or retail partners. The news source also pointed out that the MCX consortium is dealing with execution problems before the official launch. Jason Kupferberg, an analyst at Jefferies reiterated this sentiment.
“We have also heard that MCX may rollout its CurrentC mobile wallet in Columbus, Ohio, this summer, though MCX’s position could be weakened by more participating merchants starting to accept Apple Pay,” said Kupferberg, according to the news source.
What the future looks like for Apple Pay
Goldman Sachs analyst James Schneider told Investor’s Business Daily that even though new retailers are being added all the time, Apple still needs to do more to inspire repeat usage of the mobile wallet. iPhone users have tried out Apple Pay, but has not yet become a staple in their consumer life.
“Survey data suggests that only about 15 percent of iPhone 6 users have tried Apple Pay at least once, with repeat users only about 6 percent – implying roughly 1.6 million regular users at this stage,” said Schneider. “Although the linkage between rewards programs and mobile payments adoption is still anecdotal, we believe the integration of loyalty and rewards programs will be an important driver for consumer adoption, especially for repeat usage.”
Ultimately, Apple Pay’s retail partners will only grow in number over time. Apple will likely take the advice of experts and integrate loyalty and rewards programs with the service as well. It won’t be long before the technology because a staple in consumers’ lives. Retailers should make sure that they are prepared to capitalize on this trend.Back To Blog