Friday, September 26, 2014
The launch of Apple Inc.'s near field communication (NFC) -capable mobile payment scheme, Apple Pay, in conjunction with the debut of the iPhone 6, has been hailed as the future of contactless, in-store payments. But Jared Isaacman, Chief Executive Officer at merchant services firm Harbortouch, said Apple Pay will go well beyond NFC in transforming the consumer's in-store payments experience.
"NFC really has very little to do with what Apple Pay is about," Isaacman said. "Real" Apple Pay, according to Isaacman, involves in-app payments that require no NFC-equipped POS terminals and, in fact, require no terminals at all.
"The consumer just presses their thumb on the Touch ID screen and the transaction is complete and it's synched to their default address," Isaacman said. "You don't have to enter anything. No user name, no password, no credit card number. That's called an in-app purchase. And that's the key integration. And that has significant implications beyond just e-commerce. That is Apple Pay right there."
By streamlining the physical payment process, or better yet rendering it nearly invisible, a transformation of the entire retail experience could be achieved. "You need NFC to have a digital wallet," Isaacman stated. "You're not going to do in-app functionality if you're just at a convenience store trying to buy a can of Coke and leave. NFC more than solves that problem. But there's an in-app capability that solves even a bigger problem, that makes the user experience even better."
The Sept. 9, 2014, launch of Apple Pay spurred many payments companies to announce that their hardware and software solutions supported Apple Pay and NFC payments. Harbortouch issued its own statement saying that the POS provider's proprietary Perkwave terminals have the same capability, which Isaacman said puts Harbortouch on par with every other service provider that deploys NFC terminals.
"So, great, we're compatible in that regard," Isaacman said. "And that's awesome. But that's not what Apple had in mind when they said they are going to get rid of the old wallet."
Harbortouch is best known for the restaurant-specific POS system that bears its name. Mentioned in Harbortouch's announcement was a provocative statement about the company's close development activities with Apple prior to the unveiling of Apple Pay. "Our new program, operating in sync with Apple Pay, is sure to transform the way consumers conduct payments in the hospitality and restaurant environment," Isaacman said in the statement.
Harbortouch will get into specifics about its new Apple Pay integration at its Accelerate 2014 Sales Conference to be held in New Orleans on Oct. 2. But Isaacman partially lifted the veil nonetheless, with mobile loyalty and rewards functionality front and center. He said that, more than cheaper rates or any particular value-added service, what merchants really want from their payment service providers is a way to grow businesses by increasing customer loyalty and repeat business.
Isaacman said deeper integration provided by Apple Pay will more precisely quantify rewards and loyalty programs, so that a merchant who spent $2,000 on rewards and incentives per month can see that those investments led directly to $20,000 in additional monthly revenue. "That's very powerful," he added. "That's where you're going to see Apple Pay take this ultra convenient payment to the next level."
Harbortouch's evolution from a traditional ISO when Isaacman started the business 15 years ago to more of a technologically-focused POS software vendor today has mirrored, if not foretold, the dramatic changes taking place in the payments industry. Businesses once comfortable in particular siloes of expertise, such as acquirer, processor or reseller, are being forced to transform into holistic merchant services firms offering integrated solutions that run merchants' entire businesses. That process of convergence will only speed up in the coming years, according to Isaacman.
"There's not going to be ISVs [independent software vendors] anymore," he said. "And there's not going to be POS resellers… It's not just going to be credit card ISOs anymore. Everybody is going to wear the same hat in the payments space and you either get it or you don't."
The rise of Money 2020 as the premier payment conference, dominated by tech giants like Microsoft Corp. and Google Inc., is one sign of the changing payments landscape, Isaacman said. He added that the launch of Apple Pay is just another sign of how technologically sophisticated solutions are what will increasingly drive merchant services, and traditional ISOs better get on board.
"Merchants need technology in order to integrate with advanced in-app functionality, like what Apple Pay can do with mobile rewards and mobile loyalty," Isaacman stated. "And you've got to get smart on it. They have to change; it's not about rates and fees anymore. Credit card processing rates could largely become irrelevant at some point. This is about technology. Some will get it. And some will think, 'Well, I'll just continue doing what I'm doing because that's worked for 10 years.' And they are going to wind up in trouble."
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