How Apple Pay Affect eCommerce Industry

TMO Group TMO Group

Apple has announced its flagship smartphones for the year along with its own smartwatch. The key additions in its devices this time round is Apple Pay, which aims to kickstart the fledgling mobile wallet market with security improvements and by building an agile ecosystem, at least in the US.

In 2014, for instance, mobile conversion rates were .83%, which significantly trailed tablet’s 2.37% conversion rate and desktop’s 2.67% conversion rate. Other KPIs, like add-to-cart rates and shopping cart abandonment rates are equally dismal. Apple Pay, though, has the potential to change eCommerce industry. Now let’s see how Apply Pay will change the eCommerce industry.


Targeted retail marketing involves the same customer/merchant/bank relationship that is integral to payments. Marketers looking to develop their loyalty capabilities can learn from Apple’s approach to innovation.

For example, several early movers in the loyalty and mobile payments space have relied on routing payments through their own network to track consumer spend. Consequently, transactions relied on less secure barcodes or signals generated by third-party apps and hardware. If a third-party has credit card data stored on their system, it represents a major risk to both consumer and retailer. Even Apple stayed away from it. Instead, loyalty programs must guarantee security measures for all sensitive information in ways similar to Apple’s use of tokenization.

For in-store shopping, Apple’s new mobile payment service is made possible by an NFC chip that transmits short-range commands between the user’s phone and in-store receivers.

Apple Pay also works with eCommerce purchases, simplifying the buying process to the touch of a button. After credit card info is stored (Apple has partnered with Visa, MasterCard, AMEX, and a handful of banks) users only have to touch the screen and their fingerprint will be verified with TouchID. The one-touch payment ability is in line with online retailers’ perpetual focus on simplifying the mobile shopping process.

Apple is creating a seamless payment experience, and a big part of this is making elements of payments that now require active user input (like PIN entry), and making it invisible, so that a customer can continue on their journey without digging into their wallet. This experience will require more intelligence on the back end of payments – the part that consumers don’t see – and will require the help of the ecosystem.

With Apple Pay there will be more data streaming into the system, which will require more work in the background. The reason the consumer can do less is that other data points are being analyzed, and its data that is personal to the user. For example, companies can look at clickstream data to capture the way you move the computer mouse or measure the arc of your mobile phone swipe. All of these data points that can be used to feed your behavioral profile, which can then be analyzed to ensure it’s consistent with what you’ve done before. If it is, then the payment process won’t be intrusive.

The fact that this is a new payment service – on the most popular mobile device – that affects an area of commerce that has had exponential growth in the past decade. How easy it is for sellers to adjust to the service and what percentage of users take advantage of it remain to be seen.

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