Depending on which survey you read, anywhere from 28% to 48% of iPhone 6 users have already tried Apple Pay, and half of those who haven’t intend to do so in the next 90 days. These astoundingly high numbers will impact the payments industry just as iTunes impacted the music business, and players who adapt will prosper and those who don’t will suffer. We are at a point where a cautious “wait and see approach” will result in lost ground.
Currently the biggest opportunity for issuers to gain ground is to provide mobile payments to the vast majority of their customers who don’t have an iPhone 6 and don’t intend to give up their preferred mobile brand. These customers are sharing the same interest and excitement about mobile payments as Apple users. They’re seeing the same ads, reading the same articles, and witnessing first hand at the point of sales the convenience of mobile payments. Banks have the opportunity to draft the momentum Apple has created with non-Apple users, but this time issuers don’t have to settle for being intermediated by another brand.
The average American has 3.7 cards in their wallet and most of the time these are cards come from a variety of issuers; I guess I have 1.7 less cards than average. I carry a top of wallet card that I’ve been using almost exclusively for no other reason than this is what I’ve always done. It has airline rewards associated with it, but so does my other card which I carry just in case something goes wrong with my first card. That’s the kind of person I am.
As soon as my plan allowed, I turned in my old iPhone for an new iPhone 6, but when I tried to load my card into passbook I got a message saying “your issuer does not yet offer support for this card”; proving my point as to why I carry a second card. Consequently my second card is now the one in passbook and it works great! I’ve been using it for grocery shopping over the last month and this weekend I used it at the pharmacy, a department store, and for purchasing a smoothie. Mobile payments just made me cool with my Gen Y kids again!
And a year from now if someone were to ask me why I use this card in passbook, my reply will be this is what I’ve always done. Once it failed, I don’t feel compelled to try my other card to see if it works. I expect that as more retailers accept mobile payments my mobile card will have the bulk of my transactions. The moral of my story is that once habits get established they tend to stick and we are about to see the biggest wallet shuffle in a generation thanks to mobile payments.
Unless I’m the only consumer in the world who tends to change brands only when the need arises and then stick to established habits, banks should be rushing to take advantage of Apple Pay momentum to establish habits in their largest segment of customers who aren’t iPhone 6 users. And by the way, that is the largest number of your customers out there and still growing. Apple has only a 38% share in the US, down from 47% last year. The picture abroad is even starker with the relentless rise of Android.
The good news is that early adopters of mobile payments are the very same customers to whom the bank is communicating with most often, their mobile banking customers. What could be more logical than to target these innovators by offering payments within the banks branded mobile application they already use and love?
Enabling payment in the mobile banking applications allows the customer to be offered participation in mobile payment while they’re in the application. This in turn means that the consumer has already logged into the mobile banking app and verified their identity before the service and a payment credential is offered; a method that eliminates most of the fraud that issuers have experienced with Apple Pay. It also means the consumer gets the opportunity to associate the bank’s brand with mobile payments in the same way they associate the brand with other financial services enjoyed within the mobile banking application.
By adding mobile payments to their own mobile app means the consumers will associate the innovation, excellent experience and convenience of mobile payments with the bank and it’s brand, not a third party wallet.
Banks who act now can ride the wave of exiting momentum to lock-in their most valued customers with a secure bank-branded experience will increase the usage of their credentials, all fees associated with it and position themselves to offer additional value added services for their customers. They will end up on top of the mobile wallet. Those who hesitate may become lost in the shuffle.
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