Apple Pay: hardware

Does anybody doubt that ApplePay is a game changer in the adoption of mobile payment in Western markets? Since its inception in 2014 Apple Pay have been gradually introduced to multiple countries of diversified demographics, economy and geography, everywhere gained positive reception and, usually, becoming one of the most popular mobile payment schemes. It is still rather multi-regional than global solution (see the chart of ApplePay availability below), nevertheless its impact is growing continuously. The battle for customer hearts has been won*.

Global availability of Apple Pay 2020; update from Wikipedia

On top of a favorite device

ApplePay takes advantage of the appealing power of the whole Apple ecosystem. It applies all smooth experience Apple users are experiencing while dealing with the company equipment. Back in 2014 the enrolling process and payment experience was outstandingly more intuitive than anything on the market. Apple’s wallet is a native app ready to use, pre-installed on every iPhone and works perfectly within iOS ecosystem. But it is not entirely about software. The experience Apple delivers is equally founded on software and hardware. Talking about the latter – hardware is more recognizable and adorable (among dedicated fans) than software. In the past every new model of iPhone met with enormous interest and evoked extreme emotions. Apple biyearly presentations used to be, arguably, the most celebrate event in digital world. Lately their charm faded a little, and the last launch of the new iPhone SE was practically unnoticed*. However, iPhones are the favorites for their users, which gives a unique advantage for ApplePay over other mobile payment schemes. The other mobile payments are based mainly on software, including Android Pay and thousands of digital wallet. ApplePay is experienced as a part of the smartphone native functionality, which creates more trust, more intuitive operation, more consistent user experience.

Hardware makes a difference

To understand how hardware impacts mobile payments it’s enough to compare the flow of contactless transactions with different tools. iPhone with face recognition (Face ID) requires double click of the side button to authorize a payment (assuming user’s face is recognized as the right one). iPhone with fingerprint reader (Touch ID) requires placement of user’s finger on the home button. The first applies, for example, to iPhone 11, the latter – to iPhone 8 (and both generations of iPhone SE). It is probably one of very few use cases when older technology, fingerprints, delivers simpler and smoother experience. Placing one’s thumb on the phone is pretty easier than double clicking relatively remote side button. However, nothing can beat the simplicity of contactless payment with NFC enabled payment card. Under the acceptable limit (when PIN input is not obligatory) the simple tap is enough to pay. This example clearly shows how hardware design drives usage. Still contactless cards are widely used for paying and, although payment is the only application of that piece of plastic, people prefer it over the phone. Theoretically one can do everything with the phone and there is no need for carrying banking cards in the wallet, however consumer still do.

User experience differs due to hardware customers use

Not the whole payment world is driven by hardware

The power of familiarized hardware is enormous and because iPhones are the most favorite and personal devices for so many customers, ApplePay has shorter adoption curve that any other mobile payment. The same mechanism is responsible for persistent presence of plastic cards despite fast adoption of smartphone and wearable based mobile payments. A card is well known, familiar tool (a piece of hardware of some sort) and it makes it difficult not to pay with it. For the same reason wearable-driven payments are not taking off as fast as it was expected*. A watch or band is not a hardware we used to pay with, we have to change our habits and try. Just remember, I am talking about westernized payment markets, while Asian payment super apps, on the contrary, built their competitive advantage purely on software functionalities*. Here the adoption cycle is very short because customers are already used to the idea that mobile app can do anything they want. Paying at the store is just one of the zillion things mobile apps are for. Is South East Asia ahead of Europe or North America, or both models will remain different, we should learn shortly.

The best of both worlds

ApplePay is a solution arising from both software and hardware. It merges successfullystrengths of iOS and iPhone, an operating system and device. It plays on the field of Garmin or Samsung payment solutions, but also exploits advantages of, let’s say, Android Pay. Every time the hybrid proposition is created there is risk of taking on board all weaknesses, not strengths of hybridized solutions. Creators of ApplePay was able to avoid that risk and the result is overwhelming. Customers who choose to pay with iPhones because they trust the device, find payments as another function of their favorite hardware. Customers, who loves intuitiveness of iOS application, will use ApplePay anyway. The app is already installed, they just need to use it.

*for more reading on the subject check the links provided in the comment below