For years, tech evangelists have envisioned the dawn of the mobile wallet, and with the recent announcement of Apple Pay, it seems as though mass consumer adoption may finally be upon us. Big-name brands like Macy’s, Bloomingdale’s, Target and McDonald’s have at long last made the decision to adopt this technology, convinced that Apple has the power to succeed where others — even the mighty Google — have failed.
And they may well be right. After all, as an endless array of pundits have lined up to tell us so over the last month, Apple wasn’t the first company to launch an MP3 player, but they were the first to drive mass adoption with the iPod.
So, how will Apple Pay play out?
The mass adoption of mobile payments — powered by Near Field Communication (NFC) technology — has always been a chicken-and-egg game. Consumers weren’t going to start using a mobile wallet until the majority of stores and restaurants accepted it. And merchants weren’t going to go to the trouble of installing NFC terminals until they saw a mass of consumers adopting mobile wallets. For a mobile wallet to be successful, both sides of the marketplace must be forced into action.
Nobody doubts Apple’s ability to drive consumer action — witness their difficulty even keeping enough iPhone 6 Plus models on the shelves — and that they have achieved buy-in from some significant national retailers, but the true test of Apple Pay’s success lies on Main Street, and that’s where Apple has timed its launch to perfection.
For a mobile wallet to really impact consumer behavior, its acceptance has to be ubiquitous — not just in the Targets and Macy’s of this world, but in our local bodegas, mom-and-pop shops, independent coffee shops and food trucks.
You might think these businesses are a less important slice of the pie than the big-box retailers, but you’d be wrong. At last count, small business accounted for around 54% of all U.S. sales. Without Main Street, Apple Pay would flounder.
And that’s where Apple’s timing comes into play. Traditionally, local merchants have been reluctant to switch from their electronic cash registers and PC-based POS systems, no matter how outdated they may have seemed. New technology was deemed an unnecessary and expensive luxury. That’s all about to change. Unbeknownst to many, small business owners are actually facing a major opportunity (or threat, depending on how you look at it) with the introduction of an entirely different technology, EMV.
Eurocard Mastercard Visa (EMV), already a widespread payment technology throughout the rest of the world, is about to replace the credit card magnetic strip we’re used to in America with a more secure chip. This technology has been around for a while but the U.S. market is now finally about to catch up. Why now? Simply stated: liability.
Starting in late 2015, liability for fraudulent credit card purchases will shift to the merchant, and not the card issuer, if that merchant’s point of sale system is not enabled for EMV payments. This is a huge change that could mean sizable financial repercussions for the average small business owner if they are targeted by fraudsters — and we’re already seeing a lot of merchants looking to upgrade their technology as a result.
So, small businesses find themselves faced with a “perfect storm” as both EMV and Apple Pay now press them to upgrade their point of sale. It’s always been clear that a mobile wallet would need small business adoption to really succeed, and it seems Apple has timed their new product to perfection.
Jason Richelson is co-CEO and founder of ShopKeep POS, a provider of cloud‐based point of sale software for managing retail shops and restaurants.