Apple‘s commitment to consumer privacy may hamper the progress of its Apple Pay technology, claimed research by Timetric.
While many vendors hope to be able to improve their ability to market directly to consumers using big data, Apple Pay’s technology prevents any data from being collected.
According to the report: "Its Secure Element (SE) transactions are firewalled from the phone’s other functionalities, making it impossible to collect consumer data. This feature is unattractive for many merchants looking to improve their consumer targeting through big-data analytics.
"Some large US merchants, such as those belonging to MCX, already see Apple Pay as an obstacle to improving their margins through data analytics."
The report also adds that Apple Pay may find less purchase in the European market than in the US. Low interchange fees outside the US, with Europe serving as a particular example, will make Apple less likely to venture into these markets due to a lack of potential profit.
Apple may therefore limit the deployment of the technology to "markets where iOS has a relatively high market share, such as the UK, Switzerland, Canada and Australia," according to Timetric.
"Apple may find fewer incentives to launch Apple Pay in markets such as Germany, where iOS has a market share of less than 15% and interchange fees are lower than those in the US."
The report hails Apple Pay as a "major milestone in the evolution of mobile payments" due to its combination of existing technology including Secure Element (SE), tokens and biometric authentication. However, Timetric comments that the technology and mobile payments technology more generally are unlikely to replace conventional cards.
"Research suggests that conventional cards, which dominate cashless retail payments, are unlikely to be challenged by mobile payments by the end of this decade, as mobile payments still require extensive consumer education and merchant commitment to become mainstream."
"Even if mobile payments continue to gain traction, conventional cards will act as a necessary backup if NFC readers are not available or mobile devices are out of battery."
