The iPhone and Apple Watch contain sophisticated security and encryption protocols for use with Apple Pay. To make it very easy for customers, Apple has brilliantly made the setup and use incredibly simple. Has that simplicity fooled customers into thinking that the Apple Pay process is risky and makes them vulnerable? A Pew study suggests that potential customers mistake the simplicity for various kinds of vulnerabilities, and they shy away.
Apple's Eddy Cue introduces Apple Pay.
Long ago, Apple correctly concluded that if the Apple Pay set up and use were too geeky, confusing and time consuming, no one would adopt it. The company was, of course, right. And so, Apple engineers created an exceptionally easy way to pair a personal credit card with the iPhone and its Apple Pay and NFC payment subsystem. For many young people, comfortable with other mobile operations, who did some casual reading and learned about Apple Pay basics and security, there hasn't been much of a problem.
However, a Pew study last month has uncovered some unsettling customer tendencies. "Who Uses Mobile Payments?" While the study found at 46 percent of American consumers have made a mobile payment, usually a purchase, it also found that....
Consumers often don’t know how mobile payments compare with other payment methods in terms of convenience, cost, privacy, and security.
The study goes on to point out that...
Millennials and Gen Xers in particular are motivated to use mobile payments in part because they like receiving rewards, discounts, alerts, and electronic receipts. Consumers are also interested in avoiding fees, such as overdraft or check cashing fees, and using their smartphones to help them budget.
However, the report also surfaced some concerns that consumers have about mobile payments. The biggest concern, shared across all age groups, is the loss of funds or identity theft. They also worry that retailers and others are collecting information about them, including "tracking their locations when they execute financial transactions."
The report concludes, in part....
Across generations, concern about the safety of mobile payments technology is the biggest obstacle to use. Specifically, consumers are concerned about the potential for identity theft or loss of funds. ....concerns and uncertainty about the safety of mobile transactions and the lack of systems for depositing cash directly onto mobile websites and smartphone apps may be holding back this technology. Addressing these deficiencies could increase adoption....
Part of the problem here may well be that Apple has done too good a job hiding the technical details of the transaction which could, by their process, provide warm fuzzies to the consumer about the technical means used to protect them. It's a double-edged sword, however. If the friction in activation and use is too high, consumers won't take the time to activate Apple Pay.
Another part of the problem is that the ease of activation, use and user interface often leads Apple customers to make incorrect technical assumptions.
- If one takes a picture of the credit card in the Wallet app, the number must be stored in the iPhone, right? (Wrong.)
- If the Wallet app displays the last five digits of the credit card number, then the rest of the number must be in there—and transmitted when the payment is made, right? (Wrong.)
- If one loses their iPhone, someone else could extract the credit card number from it, right? (Wrong.)
- When one makes an Apple Pay payment, Apple is able to track exactly what was bought and where, right? (Wrong.)
Apple and merchant partners have done a really good job of making the case for how easy it is to make an Apple Pay payment. What hasn't happened is communication to the customers by the banks and Apple as to why this is a preferable form of payment, probably for political and competitive reasons. And the incredible ease of use of Apple Pay has no capacity, in itself, to make a visible affirmation to the customers as to why it's more secure. That's why almost every merchant and casual customer I've talked to says, "Apple Pay? Isn't that insecure?"
The whole experience is just too simple and easy to be judged as trustworthy by many. That unexpected consequence could well be Apple's next marketing challenge.
Page 2: The Tech News Debris for the Week of June 13th. AI Agents are cool. AI Agents could be dangerous.