Apple Pay

Major Banks Cashing In On Apple Pay Potential

On Jan. 22, 1984, Apple ran a commercial during the third quarter of the Super Bowl that helped define its brand, teasing to the release of the Apple Computer Macintosh that ended by saying “you’ll see why 1984 won’t seem like 1984.”

Fast forward to 2015 when consumers have entered Tim Cook’s “year of Apple Pay.” And, if the Super Bowl on Feb. 1 is anything like the AFC and NFC Championship games, viewers rooting on the Patriots and Seahawks are likely to see commercials for Apple Pay. But this Super Bowl, it probably won’t be Apple shelling out the projected $4.5 million price tag to get Apple Pay highlighted in the prime-time slot. Instead, it will be the major banks like Bank of America, Wells Fargo, Chase or Capital One who will instead.

How has Apple been so successful in persuading issuers to advertise a mobile payments product that doesn’t even bear their name?

Because those issuers want their consumers, who probably have a couple of cards in their wallets, to use their cards to enable Apple Pay’s mobile payments capabilities. And since it’s been proven that iPhone customers are those who also are more affluent, and therefore, spend more money, issuers don’t want to miss out on the chance to catch that consumer’s enthusiasm for Apple Pay and turn it to their advantage. Add to that, data taken from the InfoScout survey done last year that suggested that most people who could use Apple Pay hadn’t tried it yet, also suggested that more than half of all consumers would be willing to load multiple cards in their wallets.

Cook had a lot to say earlier in the week about the momentum that Apple Pay has in the market. According to Cook, “Apple Pay makes up two out of three dollars spent on purchases using contactless payments across the three major U.S. card networks.” Granted, contactless payments are a very, very, very, very small piece of transactions, but Apple Pay has gained mindshare and momentum in a way that few other mobile payments applications have been able to do.

Steve Weinstein, an analyst at ITG Investment Research Inc., stated last year that Apple Pay is “doing exceptionally well,” considering its time in the marketplace. Because Apple is competing with PayPal and Google Wallet — which the latest stats from ITG Investment Research show capture 78 percent and 4 percent of the digital payment dollars spent, respectively — there’s a lot for Apple to prove. November figures from the company’s research shows that Apple Pay made up for 1 percent of digital dollars spent. Based on that same research, Weinstein predicted that 20-30 percent of people who buy the new iPhone activate Apple Pay.

“Once somebody uses it, it becomes a little over 5 percent of transactions that they were doing. It’s a lot. It’s really surprising, because you can’t even use Apple Pay in that many locations,” he said in an interview with Bloomberg

Still, banks want to be part of the Apple Pay revolution. And, making it easy to put those issuers’ cards into an Apple Pay wallet is what the banks have been working on for the last year or so. Reminding consumers that Apple Pay is just a touch away is the next logical step.

Chetan Sharma, an independent wireless industry analyst, told Bloomberg in an interview that Apple will likely continue to work with banks and credit-card networks while it works to gain market share in the payments industry. But that could change, she said.

“Apple is working with the financial ecosystem, at least in the short term,” Sharma said. “It’s the classic Apple strategy — that’s what they’ve done with media. Once you have leverage, you can take it down.”

While getting consumers hooked on mobile banking has been a focus of most major banks for years, getting them to make the shift away from plastic cards to mobile transacting is the future and one that weighs heavily on the minds of issuers. Making it easy to put those issuers’ cards into an Apple Pay wallet is what the banks have been working on for the last year or so. Reminding consumers that Apple Pay is just a touch away is the next logical step.

So that’s what banks are doing. The subtext of the advertising is interesting, and actually twofold. First, issuers want to signal to their customers that they are part of the mobile transactions trend with the hot technology company, Apple. And, second, they are reminding its consumer base that convenience comes with doing business with them. Take Bank of America for example in its latest commercial: “The new, easy, secure, smart way to pay with a simple touch. That’s the convenience of innovative connections. That’s Bank of America.”

Bank of America has also been the only bank that’s publicly announced how many customers have registered their cards to Apple Pay — 800,000 Bank of America customers have enrolled 1.1 million cards in the service as of Jan. 15.

“We’re providing our customers with tools to make their financial lives better, including our 30 million digital banking customers. For them, better means simple and convenient. Apple Pay is another exciting move in that direction,” Brian Moynihan, CEO of Bank of America, said about leveraging the service for its customers.

The focus for Chase and Apple Pay is about saving time for its customers. In a recent commercial showing the story of an indie rock band on the move, the commercial simply states: “Your phone and your wallet are now one. Get on with the show.” “JPMorgan Chase has been pleased to collaborate on Apple Pay to create a better, faster and safer payments system, which puts the customer first, creating an exceptional customer experience for consumers and merchants. Everyone wins,” said Jamie Dimon, CEO of JPMorgan Chase.

Wells Fargo has also been a major proponent of Apple Pay, and also highlights the speed of the service: “With Apple Pay, using your Wells Fargo card just got easier. Done,” the commercial ends, which showed the story of a husband who returned home to his surprise party early because of how quick Apple Pay made his errands.

Capital One takes it a step further in its commercial, promoting its own mobile wallet app while showcasing how Apple Pay works. “This is your new wallet,” the commercial states, which ends with the bank’s classic phrase: “What’s in your wallet?”

And every major bank that’s been pushing for mobile banking and mobile transactions is also pushing for Apple. Apple Pay has slowly become synonymous for mobile payments.

As MPD CEO Karen Webster pointed out in her Super Bowl/Payments piece on Monday (Jan. 26): “The conversation about mobile and mobile payments has shifted to Apple, Apple Pay and therefore the networks ever since Apple Pay launched. In fact, I hear time after time that merchants are asking for Apple Pay not as a ‘generic’ nod to wanting to accept mobile payments but because they specifically want to accept Apple Pay.”

Because Apple doesn’t release the specific amount of users or Apple Pay — nor do banks — it’s hard to predict with any accuracy how much volume it is driving. But Cook is solidly bullish, saying in Tuesday’s (Jan. 27) earnings call that 750 banks and credit unions have signed on to Apple Pay’s proposition, and that number will likely grow.

“There’s not a day that goes by that I don’t get notes from many businesses outside the U.S. wanting Apple Pay — and banks and merchants,” Cook said during the call.

While we’re not sure how much play Apple Pay and mobile payments will get during the Super Bowl, here’s a look at some of the bank’s most recent commercials:

Bank of America

Bank of America does not envision its Apple Pay users running errands or rocking out. Instead it envisions them as spending their rather large reserves of discretionary income.

To sum up the commercial quickly, an affluent looking professional woman buys her husband an expensive looking shirt, her dog an expensive looking treat and herself an expensive tube of lipstick. Message clear, affluent consumers use Apple Pay and are Bank of America customers.

It’s also a very different looking demographic for Bank of America’s TV spots. Over the last several years, Bank of America has created at least eight ads featuring people at grocery stores and over a dozen featuring gas stations. Some, like this recent spot, actually work both in.

Wells Fargo

Wells Fargo for the last few years has favored inspirational commercials, seemingly stemming from ads like this. The message of the one Wells Fargo ad is: big or small, Wells Fargo wants to be part of making your dreams a reality. It kicked off a string of ads featuring small businesses and spots about young people achieving their dreams, like the one below.

The tone even conveys through to Well’s Fargo’s newer spots that are focused on highlighting the their in-house mobile products. This one follows the amusing and occasionally embarrassing adventures of a young man on his way to a job interview. The point is to show how easy to is to bank on the go – the message is “…so you can get to the interview on time, get the job and achieve the dream.”

That ad is a slightly different tone from the one presented in their spot featuring Apple Pay specifically. Though similarly amusing, the focus is different — it’s on how much easier it will make the user’s life. In fact, what makes the commercial funny is that unlike most of Wells Fargo commercials that set up the same way, this one ends with messing up a surprise party instead of starting their next life adventure.

JPMorgan Chase

While the young people in Well’s Fargo’s regular commercials are using banking to build a better future and their Apple Pay users are running errands in record time, Chase wants its Apple Pay users to most use the payments platform in the service of being awesome.

For those who can’t see, the ad follows the adventures of a band on the go who use the app to get their haircut, buy some tacos and stage a rooftop concert – the general message being Apple Pay – the best way to rock out.


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