Looking at the majority of recent articles around the launch of Apple Pay in the UK, youd be forgiven for thinking that the most exciting aspect of Apple Pay is its harnessing of Near Field Communication (NFC) technology.
Whether its the BBC running b-roll footage of a variety of hands waving their phones over contactless terminals or Sky speaking with bemused high street shoppers about what they know (or dont), its certainly captured the imagination of most journalists .
Yet people have been making payments with their mobiles for nearly two decades, since Coca Cola introduced SMS payment-enabled vending machines. The arrival of Apple Pay in-store via NFC is really just a natural extension of contactless cards. By focussing on this aspect of Apple Pay, we risk overlooking that the greatest potential, surely, is its In-App functionality.
To start with, consumers using Apple Pay via NFC are currently limited to about $31 payments at most stores, set to rise to about $47 in September. Yet for in-app, there is no payment limit, meaning consumers can buy larger-cost items such as furniture or their weekly supermarket shop and still take advantage of Apple Pays efficiency and security.
Companies also have to realize that consumers are increasingly looking to mobile apps for their content and commerce needs. Recent research from Flurry shows that app use has soared. The number of regular app users, or those who use apps between one and 16 times per day, is up 25% from Q1 in 2014 to nearly 1 billion people. The number of super users, or those who access apps between 16 and 60 times per day, has jumped 34% to 590 million.
With other in-app payment methods already launched or set for launch, including Android Pay and Samsung Pay, this means theres a significant amount of app users wholl be able to take advantage of quicker, more seamless payments via mobile.
Crucially for the mobile payments sector, this growth in app use has also been accompanied by a shift in consumer mindset when it comes to managing their finances. Bank of America recently found that nearly half of consumers are banking with mobile apps, enabling them to move money around whether the banks front doors are open or not.
The fact is that theres a growing expectation from consumers that theyll be able to pay for goods and services and manage their money through their phone, irrespective of opening hours. Consumers are likely to come to depend on in-app payments out of hours. And weve seen recently the thousands of jobs being axed by banks up and down the country due to people not needing physical outlets.
Theres also a large difference in the scale of barriers to adoption for in-store mobile payments and in-app mobile payments. NFC requires a significant initial investment in the contactless technology which enables retailers to interact with customers phones at the point of sale.
As with any hardware, its highly likely that these points of sale will become obsolete in the next few years. As smartphone penetration grows and Wifi and 4G become more prevalent across the world, its likely therell be a surge in customers wanting to pay for things on the supercomputers in their pockets. In the UK alone weve just seen news that a fifth of all online sales come from people shopping while commuting equivalent to nearly $14.5 billion every year.
NFC might have got many in the media excited, given that its a visual, tangible sign of progress in the payments space. Yet, the real excitement with Apple Pay is that it has made payments within apps quicker and more secure, enabling consumers to get what they want, when they want it, in as little as a single touch. The future of payments is almost certainly mobile and the present is increasingly in-app.
Dennis Jones is CEO of Judo Payments.
