The collective tech world got their first look at how Apple plans to reinvent the way that consumers shop and pay (merchants), curate and consume (information) and get their groove on (listen to music).
When Tim Cook took the stage today at WWDC – Apple’s much celebrated developers conference, he praised the attendees that came from a total of 70 countries. He followed that with a colorful story about a professional baseball player whose teammates were jokingly holding his 100th home run ball for “ransom” unless he fulfilled their wish list of gifts — of all Apple devices, of course.
From that point forward, there were about 120 minutes of announcements that touted Apple Pay’s global expansion, its new retail partnerships, Passbook’s makeover, iOS 9, Apple Watch enhancements, the iOS version of Flipboard and the unveiling of Proactive – Apple’s potential Google killer.
And, its “one more thing” – the introduction of Apple’s new music platform.
There were lots and lots of details shared. All kinds of stats. But one something that was still missing – the “dog that didn’t bark,” David Evans, economist and MPD Founder observed. That phrase, a critical clue to solving one of Sherlock Holmes’ famous mysteries, might actually give us more insight into Apple Pay than all of the fanfare that we all saw on stage. (We’ll tell you at the end, but see if you can guess by reading along…)
So, without further delay, here’s all you need to know about what Cook and his team said and why it matters.
And, the dog that didn’t bark.
The Apple team wowed the crowd with some impressive stats.
And that was just the start.
250,000.
That’s how many U.K. merchant locations Apple’s Vice President of Internet Services, Jennifer Bailey, told us will support Apple Pay when it launches in the country next month (July 2015). The announcement that Apple Pay would launch in the U.K. soon was long rumored, but Apple confirmed that rumor in Day 1 of its WWDC conference.
Apple Pay will support U.K. credit and debit cards from American Express, MasterCard and Visa Europe, and those issued by many of the U.K.’s biggest banks, including HSBC, NatWest, Nationwide Building Society, Royal Bank of Scotland, Santander and Ulster Bank. Other major issuing banks will follow by this fall, Apple said, which includes Bank of Scotland, Coutts, Halifax, Lloyds Bank, MBNA, M&S Bank and TSB Bank.
In addition to Apple’s 39 Apple Stores in the U.K., retailers that will accept Apple Pay in the U.K. include Boots UK, BP, Costa Coffee, Dune, JD Sports, KFC U.K. & Ireland, Liberty, LIDL, Marks & Spencer (M&S), McDonald’s UK, Nando’s, New Look, Post Office, Pret A Manger, SPAR, Starbucks, Subway, Wagamama and Waitrose.
Apple Pay will also provide access to the London Tube as well as its iconic double decker buses. Olympic aficionados might well remember the effort to NFC-enable public transportation in anticipation of the Olympics which were held in London in 2012. Apple Pay can now ride that wave.
MasterCard went on the record last week suggesting that it was ready to support Apple when it was U.K.-ready. Coinciding with Apple’s announcement, MasterCard said that it’s working with several banks, including: HSBC; MBNA; RBS/NatWest and Santander, to enable users of an iPhone 6, iPhone 6 Plus or Apple Watch to use their MasterCard credit, debit or prepaid cards directly through Apple Pay.
“In the U.K., we make more than 10 contactless payments every second, and on Transport for London alone, commuters tap to pay over 1 million times a day. With this clear shift in payment preference so strongly embedded, we are excited that MasterCard cardholders will soon be able to make payments from some of their Apple devices, knowing that every purchase is secure and offers all the same guarantees and benefits they’ve come to expect from using their MasterCard,” said Mark Barnett, President of MasterCard U.K. and Ireland.
Following Apple’s announcement about entering the U.K. next month, Visa Europe also announced it was supporting Apple Pay for U.K. Visa cardholders.
“Contactless payments are already widely embraced by millions of Visa cardholders across the country every day, so adding the simplicity and convenience of Apple Pay will catapult mobile payments into the mainstream. If people leave the house with one item, it’s their mobile phone – we’ve worked alongside Apple and the various banks involved to give customers a really seamless and exciting new payment experience through Apple Pay, so they have new ways to use their favorite Visa cards on the go and when shopping in the apps they love,” said Jeremy Nicholds, Executive Director of Mobile at Visa Europe.
Bailey also (finally) unveiled Apple Pay’s loyalty program that is its first step to making iPhones more than just a substitute for a plastic card swipe. First out of the gate programs include Walgreens’ Balance Rewards program, Kohl’s Yes2You Reward program, along with programs from Coca-Cola, Dunkin’ Donuts, Panera Bread and Wegmans Food Markets. MPD CEO Karen Webster wrote when Apple Pay first launched in September 2014 that for Apple Pay to really take off, it needed to integrate loyalty into its platform.
They obviously agreed.
The other point that Webster has made repeatedly is the need to address what merchants really want their consumers to use – private label cards. Apple Pay users will soon be able to do that with their BJ’s Wholesale Club, Kohl’s Department Stores and J.C. Penney cards.
“Apple Pay has kicked off a new era of payments and our users love the incredibly easy, secure and private way to pay,” said Eddy Cue, Apple’s senior vice president of Internet Software and Services. “We’re bringing our customers the most requested features with support for rewards and store-issued cards, and expanding how and where Apple Pay is accepted, which truly transforms the way people pay.”
Synchrony Financial retail partner, J.C. Penney, will be among the first retailers to offer its private label credit cardholders the ability to checkout with Apple Pay later this year. And MasterCard will provide tokenization services that will support those transactions.
“Mobile payments provide merchants the opportunity to transform the customer shopping experience. With Synchrony Financial’s retail heritage and commitment to innovation, combined with our unique tokenization support for private label cards, we are thrilled to assist merchants in offering their customers the choice to use Apple Pay for easy, secure and private payments with any card they choose,” said Ed McLaughlin, chief emerging payments officer for MasterCard.
Bailey also told the assembled and virtual crowd that Apple Pay will soon be accepted at 1 million locations. Just a few of the newest merchants accepting Apple Pay in stores this year include Baskin Robbins, Best Buy, BevMo!, Big Lots, Dunkin’ Donuts, El Pollo Loco, Express, Forever 21, J.C. Penney, Johnny Rockets, Kohl’s Department Stores, LEGO Brand Retail, Levi’s, Peet’s Coffee, Trader Joe’s and White Castle.
Apple’s conferences tend to be Apple-centric, of course, but the company also announced an interesting new partnership in the payments space: Square.
Apple announced at the WWDC that it would be partnering with Square to enable access to its new EMV/NFC dongle – that will, of course, also enable Apple Pay. Apple noted that merchants can now pre-order the new Square Reader, which will begin shipping in the fall. The reader is available for $49 (with a $49 card processing credit). Square announced in March that it acquired payments processing company Kili Technology to build its infrastructure around supporting NFC and EMV enabled payment readers.
Jacob de Geer, CEO of the Swedish mPOS provider, iZettle, released its NFC/EMV card reader in May, and told Webster that iZettle was ready to support merchants in the U.K. when Apple Pay launched. Which we know now is next month and why the timing of his announcement was so important.
Square also announced today that it is “offering 250,000 of these readers free as part of its continued commitment to give local businesses access to the smartest technology through secure and simple hardware.”
“Apple Pay created an easy, fast, and secure payment experience for customers,” Jesse Dorogusker, head of Hardware at Square, said in a company news release on Day 1 of the conference. “We want to make it easy for every type and size of business to accept Apple Pay with our latest Square Reader, the most powerful and affordable contactless and EMV reader on the market.”
We actually think that this is the most significant announcement of all: the renaming of Apple Passbook to Wallet.
Passbook, now Wallet, was launched in September 2012 to keep things like airline boarding passes, movie tickets, and gift cards all in one place, letting the user scan their iPhone or iPod touch to check in for a flight, get into a movie, redeem a coupon and more.
But Passbook never really took off. At least not from research projections published in the past year. Apple is obviously hoping that giving Apple Pay more utility around loyalty and private label cards will give consumers more of a reason to use it.
And renaming it will make it more obvious what it is supposed to do for consumers. Wallet is now the icon on the phone that serves as a visible cue that Apple has a wallet that its consumers can use.
Subtle, but potentially pretty powerful.
Passbook needed an explanation as to what it was used for and why consumers should care. Without much in the way of utility, no one really did.
Wallet, on the other hand, is the universal moniker for that place where consumers stick all of their payments and loyalty cards and requires no explanation.
Our research also tells us that one of the big reasons that iPhone 6 users don’t use Apple Pay is because consumers forget they have it.
Wallet might be one step in the direction to solving for that.
“Intelligence throughout the system.”
That’s how Apple defined iOS 9, which it promises to be just as successful as its iOS 8 release. Currently, Apple reported that the consumer conversion to iOS 8 was 83 percent (citing that Android only had a 12 percent upgrade rate).
But iOS 9 won’t just bring new features and apps, Apple says. iOS 9 is about connecting more devices (Internet of Things) and providing enhanced security to protect consumer data. This means adding two-factor authentication into more apps to help protect data in the iCloud.
Apple also unveiled Proactive. Proactive is the next step forward of iOS’s Spotlight search feature, which looks to tie together various pieces of the iOS experience — Siri, Contacts, Calendar, Passbook and some third-party apps — to upgrade the user experience on their iPhone.
Proactive can now take the user’s behavior and anticipate what that user wants based on habits, location, time of day and what apps are open. It can also make suggestions, and do so from an iPhone or iPad. It designed to study and learn its owner’s device and data usage habits such that it can provide timely information.
If Proactive lives up to its hype, it’s gotta make its neighbors up the street in Mountain View very, very nervous. Who needs search when Proactive pulls information from all of the apps on the phone to serve up relevant and contextual information?
Apple also announced something that really got the developer community all fired up: native apps are coming to the watchOS 2. That means the new watch operating system will be readily accessible for developers to tap into and create new apps.
Which includes the ability to use merchant rewards and store-issued credit and debit cards with Apple Pay, which can also be added to Apple Wallet. The watch will also come with an activation lock, which enables users to secure their Apple Watch with their Apple ID if it is lost or stolen.
“We are thrilled with the feedback we’re getting from Apple Watch customers, and after just a few weeks of availability we’re excited for developers to start building native apps for watchOS 2,” said Kevin Lynch, Apple’s VP of Technology. “We think Apple Watch users will love being able to see information from their favorite apps right on the watch face, and enjoy the many new experiences developers will dream up now that they have access to even more innovative features of Apple Watch.”
Apple Watch just launched in April, and hasn’t even started selling in stores, but it’s already got an upgraded OS. And Cook, showing off his own Apple Watch at the conference, highlighted once again just how committed Apple was to its latest wearable product.
“We believe in technology design for the wrist,” Cook said. “By opening the platform we will be opening new, powerful uses.”
The “one more thing” that everyone knew was coming was Apple’s announcement of Apple Music – its $9.99 monthly music subscription service.
Apple Music will launch the end of the month (June 30) in 100 countries and will be free for three-month trial before the subscription fees kick in. And, in a move designed to capture as many users as possible, it will be available on Android and Apple TV in the fall.
Apple Music is the extension of Apple’s $3 billion acquisition of Beats, a measured shot across the bow to competing streaming services like Spotify and Pandora. Apple iTunes lays claim to roughly 80 to 85 percent of music downloads, but is roughly nowhere in the streaming music business. To add insult to injury, Apple has been losing download sales and saw a 13 percent decline in music downloads last year.
Since it was widely reported that Apple was going to announce its subscription service, much of the news had already been leaked. What was a surprise was what some characterized as an unusually awkward presentation from rapper Drake, and other largely unknown music enthusiasts.
“We really love Apple Music and hope you do too,” Cook told the crowd at the end of the presentation.
Apple Music will also include the Apple Music Radio, a 24/7 worldwide radio station that will be available in over 100 countries and a “For You” feature which will offer personalized recommendations. Apple Music Connect, which is designed to connect fans and artists, was also introduced. Through Connect, artists can share lyrics, backstage photos, videos or even release their latest song directly to fans directly from their iPhone. There’s also a “New” tab that recommends songs based on recent user likes.
MySpace redux?
“We love music, and the new Apple Music service puts an incredible experience at every fan’s fingertips,” Cue said. “All the ways people love enjoying music come together in one app — a revolutionary streaming service, live worldwide radio and an exciting way for fans to connect with artists.”
So, there you have it. Lots and lots of exciting new developments and impressive stats out the wazoo – all designed to fuel the frenzy that surrounds Apple each and every time they introduce new products.
But there was one thing that was noticeably absent – the dog that didn’t bark.
Have you guessed it yet?
There was nary a word about how many consumers actually use Apple Pay or how much transaction volume is being generated by them.
We know about the billions of apps downloaded and billions of dollars paid to developers. The million merchant locations that can enable Apple Pay. And, the number of countries in which Apple Music will launch. The number of partners that will launch with loyalty offers.
We know how many apps that the average person downloads and how many are downloaded every second of every day.
But we don’t know, from Apple, how many consumers use Apple Pay.
The dog that didn’t bark.
If you want to take a look at what our consumer surveys say – two surveys done in November 2014 and March 2015 of iPhone 6 users who shop at stores in which Apple Pay was accepted – click here.
And check back soon for new data.
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