Thursday, September 25, 2014

Thoughts on Apple Pay

I'm feeling very bullish on Apple these days. Despite the #bendgate controversy that began a few days ago, they've done a tremendous job with the unveiling of not only 2 versions of iPhone 6 but also the Apple Watch. I like them so much that I upped my holdings in its stock this morning.

The star of the show, in my opinion, was none of the gadgets Tim Cook revealed during the past 9.09.14 event. Sure the iPhone 6 is snazzy, loaded with the latest processors, camera technology, and even the bigger displays. It's bound to sell millions upon millions -- especially bringing back users who migrated to other platforms for bigger displays. The Apple Watch will also be a huge hit, mainly for its tight integration in Apple's ecosystem and as a fashion accessory. But both of these are just gadgets at the end of the day. The real star was: Apple Pay.

As a tech enthusiast, I've heard about mobile payments before and even have Google Wallet installed previously. But never before has a company with Apple's leverage entered such as space and it's bound to revolutionize the way we think and use mobile payments going forward. Want to know how much leverage Apple has? A good example is looking at the emails sent out by banks and credit card companies to announce their support for Apple Pay. Every single one of mine have sent me emails to profess their love and support. That is absolutely staggering. Not many companies are able to pull off Day 1 third-part support the way Apple has done it here. Rumors are transaction costs are bound to decrease as Apple Pay is supposedly more secure than other means.

More importantly however, is the ease of use. For the first time last week, I used the Starbucks app installed on my Android phone to pay for a couple cups of coffee at Starbucks. Nothing extraordinary about this event except for that it was: (1) my first time ever doing such a transaction, and (2) surprised by how easy and seamless it was. The latter in particular stood out as I returned the following day to do the same, with same results. I swear that the experience (not the coffee) was so good that I felt more attached and loyal to Starbucks. Yet Apple Pay promises to be even more seamless as you no longer would have to go through the motions of unlocking your phone screen and opening an app to pay the transaction -- if Apple's demo holds true, all you have to do is hold your finger to the fingerprint scanner for a second and pay the payment receiver with your phone. Voila! Takes about a second or two, and the transaction is completed.

Overall, I think the changes Apple Pay will usher in are two. On one hand, people will purchase more things and use their phones to pay more frequently due to how easy and seamless the process is. No longer do you have to take out your wallet (after finding it first), pick out the card you want, swipe it, enter your zip code, and (oftentimes) signing the receipt for the cashier. All you'd have to do with Apple Pay is pull out your phone, hold, tap, and done. It's that simple. The second change will be what I mentioned before -- strangely enough, I felt more attached to Starbucks despite McDonalds being my preferred coffee venue (disclaimer: coffee is a commodity to me, so the cheapest vendor gets my business). But likewise I can see myself going to shops and restaurants that accept Apple Pay more than those that do not. What you'll see then, is a domino effect of stores and restaurants scrambling after one another to install NFC-payment receivers for Apple Pay and other forms of mobile payment (e.g. Google Wallet).

Now, everything is not all rosy as Apple Pay has just been introduced and the public hasn't really been using mobile payments. But Apple does a heck of a job marketing its products and features, so I expect people to catch on quickly. The iPhone 6 will eventually give way to future generations and the same goes for Apple Watch. But Apple Pay as a platform is here to stay and it's going to be absolutely huge. I've put money in my mouth by investing significantly into Apple today, with a strong possibility to further increasing my holdings in the near future.

Oh and one more thing: Apple takes a cut out of every transaction made using Apple Pay.