There's something interesting going on with the psychology of shopping with Apple Pay. It's not just that it's more secure than swiping a credit card, and it's not just that it's techy cool. I think I can explain it.
I've been shopping with Apple Pay on my iPhone 6 since it was introduced. So far, the discussion on the Mac web has been about the increased convenience and security plus how Apple is selling a lot of new iPhones as a result. However, over the Thanksgiving weekend, when I used it frequently (Macy's, Panera Bread, Apple Store), I came to the realization that there's something more going on here than meets the eye.
The Customer Mentality
There are three elements of Apple Pay that have a direct impact on our psychology. The first effect is how weary customers have become using credit cards. Part of that weariness, I surmise, comes from what could be called the Empty Wallet Syndrome. In the long-distant past, we shopped with wallets full of money, and when the wallet was empty, the shopping stopped.
With the advent of the credit card, shoppers have been lured into spending money they don't have with the magical gift of credit. But that gift comes with a price: debt. Sometimes, too much debt. Every credit card purchase generates some amout of worry about debt.
And so one might think, off hand, that because paying with Apple Pay is mindlessly easy that one might overspend even more. I have not found that to be the case. Like most of you, I have little intention of being enticed into ruinous debt. With Apple Pay and the credit cards I use, I see a running total—up to 10 of my recent purchases in Passbook. Eventually, as more merchants adopt NFC, it won't be hard to see every penny one has spent spent in an afternoon of shopping.
While some people may go home and enter each credit card receipt into, say, iBank, I don't think the average customer does that. Neither do they go home, fish out all the credit card receipts from bags and pockets and sum them up with a calculator. A more typical case may be the sticker shock that comes from the credit card statement when it arrives a month later. Or perhaps, when one has time, there's an eye-opening inspection with an online account.
I think the immediacy of seeing your accumulated purchases right on the device used to pay helps manage those urges to overspend blindly. A credit card can't do that. A smartphone should, after all, make us smarter. It's an unexpected experience.
Not a gimmick. Instead, a sea change in customer psychology.
But there's more.
Secondly, modern credit card transactions have come to be loaded with the fear that the merchant won't handle the credit card transaction securely. The recent breaches of Target, Home Depot, Kmart, Michaels and so on have lead to what's called "Breach Fatigue." Buying gifts should be fun. Now it's a fearful experience. The more customers are deluged with ads to buy, buy, buy, the more fear and loathing they feel. It doesn't help that a relaxing day that had traditionally been reserved for family and a spiritual thankfulness is now referred to, ad nauseam, as Black Thursday—adding to the depressing atmosphere. The security of Apple Pay, during the holidays, takes the fear out of buying by letting us focus on the giving.
Third, there is a modern meme that technology always makes things worse. It's a common feeling that those with power and money develop products that look cool, but somehow harm us in ways we didn't expect. In a worrisome SciFi future, pockets of good remain, but generally things go downhill.
SciFi future a decade ago: with a wave of the hand, Mr. Spooner is all paid up in the bar.
Image Credit: I, Robot (2004), 20th Century Fox Home Entertainment
On the other hand, Apple Pay has the virtue of creating the feeling that our technical future is getting better for a change. The transaction is highly encrypted and cannot be intercepted by a lurker. Apple, quite intentionally, cannot know what's been purchased. The merchant never sees the credit card number. In time, in a restaurant, we won't have to handle the nasty, greasy pay books, pens and BPA-laden receipts.
For once we don't feel exploited by a company and the technology it offers us.
Neither is the feeling that of geek-cool. Apple Pay changes the equation of the customer experience from apprehension to (measured) joy. If you thought that hightech shopping with an iPhone would make you feel callous, instead it brings you back to earth—by design. The very qualities of the iPhone that caused users to seek it out tend to remind the user of Apple's commitment to the customer in the very design of Apple Pay: privacy and security. These are basic human values and needs.
In other words, by being the company it is, taking a stand on these issues, and designing the user interface of Apple Pay rightly, the temptation to be technically arrogant as one pays with Apple Pay is, I believe, non-existent. Apple Pay, by design, helps to make us self-confident and mindful instead of gregarious and careless.
Apple takes a very small, almost insignificant piece of the transaction (0.15 percent) that could go towards future R&D. So the real focus by Apple is not to cash in on our buying. Nor pry into our needs. Instead, we are rewarded by being an Apple customer. Apple has, instead, monetized the process of shopping by so drastically improving the customer shopping experience that we want to have a device that supports Apple Pay. The pleasant experience leads to loyalty to Apple in the purest form.
I believe the success of Apple Pay can be attributed to those subtle design elements that, in turn, generate confidence and enthusiasm. We feel better using Apple Pay than a credit card, thanks to an elegant merger of human factors and technology.
If that's not an example of Tim Cook's product leadership and vision, I don't know what is.