What Merchants Need to Know About Apple Pay and Loyalty Apps

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Having provided a window into the future of Apple Pay and Wallet at the company’s June WWDC event, Apple recently left small businesses wondering about how to adapt their mobile strategies to stay competitive. A couple announcements impact local retailers the most:

  • Apple Pay is picking up steam, and will be offered in over 1 million businesses by the end of July.
  • Passbook, which will be renamed to Wallet starting this fall, will integrate with retailers’ loyalty apps.

These announcements have implications for all small business owners, and Apple Pay merchants specifically:

  1. Small businesses will need to upgrade their checkout processes to stay competitive.
  2. Technology previously only affordable for the big guys, is now accessible to small businesses.
  3. Apple is not disrupting current brand loyalty strategies — it’s enabling them.

Let’s pull these apart a bit:

Small businesses will need to upgrade their checkout processes to stay competitive.
What used to be seen as a nicety to offer more tech-savvy consumers, mobile payments and digital loyalty apps are now becoming table stakes for staying competitive. With mobile payments gaining steam in the mass market, small businesses should consider how to stay competitive, especially as consumers get used to paying with their mobile devices at chain retailers. According to Street Fight’s 2015 Local Merchant Survey, one-third of local businesses say they currently accept mobile payments, and early adopters anticipate 30% of their sales will come from mobile and online payments.

While we recognize that small businesses have been slow to adopt NFC-enabled POS systems, we live in a world where in the not so distant future, local merchants will have to adapt to the changing landscape and upgrade their antiquated POS systems. Highlighting this paradigm shift in changes to retail and checkout, U.K.-based telecommunications research firm Juniper Research has predicted NFC-enabled payments will total $180 billion by 2017.

Now that Square Reader is becoming compatible, small businesses with a tablet or smartphone will soon be able to use Apple Pay, further democratizing the technology. The mobile payments space will continue to heat up, and more modern POS players will surely try to win the wallet share of local business owners.

Technology previously only afforded by the big guys, is now accessible to small businesses.
Loyalty apps that used to cost brands millions of dollars to develop and manage, have recently been made affordable by companies like Belly that operate on a SaaS model and cater to small businesses. Apple Pay merchants can deepen the level of customer engagement even further by integrating their digital loyalty programs with Wallet. The customer data merchants will be able to collect by tying their loyalty program with Wallet is powerful. Besides visit history, email address and phone number, businesses will be able to understand customer purchase behavior. This enables merchants of all sizes to run smarter marketing programs; providing customers with offers they want, when they want them.

Cloud-based POS systems have also afforded small business owners the opportunity to go mobile. Besides enterprise-level features, POS software like Vend, Square and others let merchants blend in-store and e-commerce transactions, creating a cohesive big-box retail experience on a small business budget.

Apple is not disrupting merchants’ loyalty strategies – it’s enabling them.
I read a few recent articles that seemed to be claiming that Apple had “introduced its loyalty program” with the update. But the truth is that Apple is working with Apple Pay Merchants to integrate their loyalty programs with Apple Pay & Wallet. (See loyalty program integrations with Kohl’s, Wegmans, Walgreens, Dunkin Donuts, et cetera) Retailers will be able to offer modern and convenient payment options to customers, while allowing them to earn loyalty points along the way.

This is great news for large retail brands who have built their own loyalty apps, but what about small businesses? Modern digital loyalty apps enable small businesses to keep up with the latest technology. Small businesses have the ability to operate a full-featured loyalty program at a fraction of the cost of building it themselves and in the future, it could integrate with Wallet or other mobile payment platforms.

As big players like Apple and Google continue to invest in the mobile payments space, it will become increasingly important for small business owners to provide customers with the experiences they’re accustomed to at big box retailers — including mobile checkout and integrated loyalty apps. Besides providing better customer experiences, local retailers will benefit from smarter customer data to power their marketing programs and grow their businesses.

lauren licataLauren Licata is a Senior Director of Marketing at Chicago-based Belly, the country’s largest digital loyalty and rewards platform. She’s passionate about working with startups & organizations dedicated to solving today’s most pressing challenges. She’s on the Associate Board at the American Cancer Society. You can find her tweeting at @LaurenLicata.