I’m cautiously optimistic about Apple’s Passbook mobile wallet application. Though it currently lacks features and sufficient support from participating businesses, enterprises may want to start thinking about developing apps. Passbook has a lot of promise for companies in a number of industry sectors.
Although the heart of Passbook is mobile payments, it’s also for storing digital loyalty cards, gift cards, discount coupons, tickets to sporting events and movies, boarding passes for airlines, and passes for buses, subways, and railways — which increases its potential enterprise appeal.
Passbook is one of the major new features of Apple’s iOS 6 operating system, which was released Wednesday. It works on the iPhone and iPod touch, but not the iPad — perhaps because few people will want to haul around an iPad to pay for purchases or show loyalty cards.
So far, Passbook is missing at least two major mobile payment capabilities. It lacks near-field communication (NFC) for tapping an iPhone and iPod on a point-of-sale terminal. Also, credit and debit cards can’t be added.
The lack of NFC could slow the adoption of mobile payments in the US. However, Apple integrates technologies it believes already are mature or will mature. The jury’s still out on NFC.
Also, I wouldn’t be surprised if Apple added credit/debit cards to Passbook in the future.
Instead of credit/debit cards and NFC, Passbook employs QR codes for virtual cards. QR codes can be scanned on, for example, an airline boarding pass, a loyalty card, and a gift card. Two or three dozen applications are available for Passbook, such as StubHub for tickets for sporting events, concerts, and plays; Fandango for movie tickets; Ticketmaster; MLB.com (Major League Baseball); Target; United Airlines; and Sephora.
Apple isn’t the only company to recognize the evolution that’s occurring from using a mobile device “merely” for payments to a “digital wallet.” Microsoft’s new Windows Phone 8 will include a Wallet Hub that’s similar to Passbook. Google is expanding its Wallet to include similar capabilities as Passbook. This makes sense because the more functionality that’s included, the more likely companies will participate, and the more likely Americans (and others) will use it.
I’m cautiously optimistic about the success of Passbook for a few reasons. Thanks to the availability of iOS 6, enterprises that create apps have access to millions of iPhone and iPod users right now. What’s more, many iPhone users are early adopters who aren’t afraid of testing a new wallet application. In contrast, Android operating system upgrades take longer to be released and tested across all handsets and devices. One day after iOS 6 was released, it was on 15 percent of Apple devices.
For enterprises looking to offer Passbook apps without spending the resources to develop their own, some companies are already obliging. Branding Brand is one of these. This firm developed Sephora’s Passbook “Beauty Insider” app and says some 20,000 users have downloaded it.
Still, relatively few companies have developed applications for Passbook. Also, some of the employees of companies with Passbook apps don’t have any idea that an app exists or what to do with it. In addition, Passbook has some problems, as users have discovered.
Most importantly, mobile payments are not only esoteric for the majority of Americans, but also are sometimes less convenient than just swiping a credit card through a terminal or handing a loyalty card or paper coupon to a cashier.
Despite all the problems, I’m a fan of digital wallets and believe they will eventually become mainstream, especially as companies look to address consumer demand. As a consumer, I don’t want to carry multiple credit cards in my wallet, numerous little loyalty cards on my keychain, boarding passes in my coat pocket, and subway cards in my pants pocket. I want to get rid of all that plastic and paper. I want everything to be on my phone, secured with a PIN, and remotely wiped if lost. I want loyalty points to be added automatically to purchases. I want to receive location-based/geo-fenced discount coupons transmitted automatically to my phone as I walk near a shop.
Passbook is just one of many mobile payment/mobile wallet systems that are commercially available, undergoing trials, or still in beta, such as Isis, the Merchant Customer Exchange,Lemon, and Groupon. It’s a real mess right now as companies jockey for position, but many large companies already are participating. Enterprises need to stay abreast of developments and seriously consider whether to develop an app for Passbook.