I got a call this week from John Stewart of Digital Transactions regarding a piece he was writing based on an article on The Information website titled “Apple to Expand Secure Wireless Chip Beyond Payments.” The idea of the article was that greater use of Near Field Communication for various applications could give a boost to Apple Pay, which has been languishing since its launch almost four years ago. In fact, Mercator Advisory Group’s most recent consumer survey on the subject, described in the report “Mobile Payments: Greater Value Needed for Widespread Adoption,” found that usage of Apple Pay actually declined between 2016 and 2017, from 14% to 10% of U.S. smartphone owners (this includes online purchases; the numbers are actually worse at the brick-and-mortar level, where usage dropped from 12% in 2016 to 8% in 2017). I have seen similar reports of declining usage in other sources, and the other NFC-based mobile wallets (Android Pay, Samsung Pay) are not doing much better.
This put me in mind of a blog post I wrote a couple of years ago that attracted some controversy. The blog was provocatively titled “Is Apple Trying to Kill NFC?” At that time, Apple was fighting an antitrust complaint by a group of Australian banks trying to force it to open up the NFC chip so that they could use it for their own branded mobile wallets. My belief at that time, which I feel has proved correct, was that Apple was hampering the prospects for its own wallet by preventing other companies from accessing the NFC chip and was thereby creating an ecosystem around it that would help train consumers to use “tap-and-go” on a regular basis.
Now it appears that Apple has begun to open up its NFC chip, albeit for nonpayment applications such as opening hotel doors. I told Digital Transactions that I do believe this would help boost prospects for Apple Pay and the other NFC wallets, although they have lost a lot of ground to Quick Response Code (QR code)-based wallets like Walmart Pay and other proprietary merchant wallets. Having used Apple Pay since its launch, I personally prefer it to QR code-based solutions. Its main problem is that it doesn’t give the user any incentive to use it beyond convenience, as opposed to merchant wallets, which integrate rewards and offers. The best option (as I said before) would be to allow third-party applications, including branded wallets, to access the NFC chip directly. Short of this, at least allowing its use for some applications would help get users accustomed to using NFC, and they might decide to give Apple Pay another try.
The Apple Worldwide Developers’ Conference is this week, and I hope we will see some sort of official announcement regarding NFC. Then we will know for sure the scope of the opening. If it does not include third-party wallets, I will be disappointed, but at least it will be a step forward.
I would love to hear your thoughts on this issue. I can be reached on LinkedIn at https://www.linkedin.com/in/amcpherson or on Twitter at https://twitter.com/aaronmcpherson.
