Magazine article American Banker

Apple Pay's Lack of Loyalty Perks Is a Smart Move

Magazine article American Banker

Apple Pay's Lack of Loyalty Perks Is a Smart Move

Article excerpt

Byline: Evan Schuman

The most striking thing about Apple Pay's recent loyalty announcement is that it included no loyalty program for Apple Pay.

Apple did include acceptance of retail loyalty cards -- ones that encouraged loyalty to that retailer -- but nothing to encourage loyalty to Apple Pay. For mobile payments, and Apple, that may be for the best.

Before Apple Pay can launch a successful loyalty program -- where shoppers would get discounts or other incentives to use Apple Pay instead of magnetic stripe or EMV -- consumers first need a reason to aggressively embrace broader mobile payments, and merchants are better suited to encourage that change.

Given the sharp behavioral change that mobile payments require, if no one pushes consumers, it will be almost impossible to get mobile payments out of single digits of all payments. Without incentives, it's unclear if mobile payments can even get to one percent any time soon.

The rationale for avoiding an Apple Pay-led loyalty play is a healthy long-term mobile payment market needs to feel constantly present, just like plastic payment cards today. A U.S. consumer can be confident that a Visa or MasterCard in his pocket will likely pay for anything he'll need. To get that kind of mobile payment omnipresence will require massive support from retailers of all sizes, and it's better for Apple to position itself as a partner.

With that merchant support in place, mobile payments have a shot. But what will make consumers change purchase behavior if cash incentives don't materialize? The answer is changing demographics -- and again Apple is wise to go slow with discount enticements. …

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