Apple Pay's Ecommerce Impact: Typing in Your Credit Card Number is So Yesterday

By Matt Helmke

September 11, 2014

M-Commerce: Typing Credit Card into PhoneEarlier this week, tucked into all the hype at Apple’s latest Keynote, was this fact: it’s about to get a lot easier for your customers to finish an online shopping session while on their phone.

And that’s big news.

Our latest Ecommerce Quartertly (EQ2 2014), to be released later this month, explores the state of mobile commerce and how it’s poised to become a larger player in the ecommerce space. Already, ecommerce traffic from smartphones has surpassed ecommerce traffic from tablets. But, in nearly every category that points to revenue, mobile is flailing. (If you want to receive the EQ when it's released, you can sign up here. And we'll send you great content every other week)

In Q2 2014, for instance, mobile conversion rates were .83%, which significantly trailed tablet’s 2.37% conversion rate and desktop’s 2.67% conversion rate. Other KPIs, like add-to-cart rates and shopping cart abandonment rates are equally dismal.

Apple Pay, though, has the potential to change that.

According to the Keynote, Apple Pay operates out of the iPhone’s Passbook app and lets a customer add a credit or debit card from an iTunes account by entering the card’s security code. A customer can also add a new card by using the phone’s camera to capture all the information.

To pay, a customer selects the “Apple Pay” button on the checkout screen. That’s it.

For now, the feature is limited to in-store purchases using the new iPhone 6, iPhone 6 Plus and Apple Watch or in-app payments on those devices, but Apple has announced an API for developers. Given the limit to in-app payments, it’ll be interesting to see whether this feature makes its way to on-site payments.

(Though, it should be noted, there’s a new Safari feature in iOS8 that enables users to simply hit “Scan Credit Card,” snap a photo of their credit card, and the iPhone intuitively auto-fills the numbers, saving the shopper the time and effort of manually inputting the info. The user can also save the card information directly into Safari’s Passwords & Autofill settings.)

Why does this matter? Well, if Apple, which reportedly has more than 800 million credit cards on file and expects to sell between 70 and 80 million new iPhones by the end of this year, thinks there’s a better way to convert customers on mobile devices, you need to be thinking about it, too.

If they can get a fraction of that audience to buy in, it’ll start changing the way customers conduct m-commerce transactions. A preview of this, probably, is what happens when retailers add or promote PayPal functionality on their checkout pages (which, by the way, we covered in a recent case study with GNC).

Apple, obviously isn’t alone in this endeavor. There’s Amazon’s Fire phone, which lets you scan a real-world image and be directed to that product detail page on Amazon, and then there are social commerce startups that are linking a user’s “like” on Instagram and other networks with intent to buy, sending them an email with a shopping chart pre-populated with the items they liked.

Clearly, then, outside developers see the swell of mobile ecommerce traffic as an opportunity that’s too big to miss. But, if anyone has the ability to get customer buy-in for a new purchase technology, it’s Apple.

Photo of customer inputting credit card number on mobile phone courtesy of Shutterstock.

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