Update: This article was written by one of our contributors Brian who had predicted Apple Pay like systems in 2012. Isn't that Incredible? Read More if you don't agree...
Apple has entered into the mobile wallet marketplace by sticking just a toe in the ocean of mobile payments. In the process Apple will change just about all aspects of discounts, ticketing and payments.
Today 6/11/2012, is the moment that many have waited for, the beginning signs of the Apple mobile wallet called Passbook. Passbook is an iOS 6 app fully integrated into iOS 6 with developer APIs to extend current features to other iOS apps. Passbook will have APIs for centrally locating just about all gift cards, loyalty cards, reward cards, incentive cards and ticketing. Much like the iOS Newsstand and Books apps this is more of a conduit for innovations.
Passbook is partly the work of the designer of Starbuck’s very successful 2D barcode mobile payment solution, the mobile wallet and NFC genius Benjamin Vigier now working at Apple. This guy is a powerhouse that designed Paypal Mobile, Sprint MyMoneyManager, Mobile Wallet applications for 2 top #5 US carriers, mFoundry Mobile Banking WAP platform, NFC Wallet for a top 3 US bank and led SanDisk mobile commerce and NFC activities. We will see a great deal of his work at Apple in the coming months.
I have had some time to digest my early exposure and early information about Passbook and can say with rather high certainty we are seeing the first brick in Apple’s “mobile wallet” system.
Beautiful Passbook UI.
Passbook, An IOS Wallet API
By creating Passbook Apple will establish a secure standard for storing and sorting virtual cards, tickets and offers in iOS devices. There will be a number of features included on the launch date but many more will be unveiled as the product becomes more integrated with Payment Cards. Apple has already established an impressive number of large retailers to use and integrate Passbook into existing iOS apps, for example Starbucks massively successful mobile payments app. More retailers will announce how they will use Passbook in the summer as they realign front end systems and back end systems.
Passbook's user interface presents the user's personal items in a card-like interface that is updated live as things change. This skeuomorphism visual design is very much like the former Square Card Case that has been replaced by the “Pay With Square” app. Passbook goes far beyond this concept by being a truly open system that any retailer can use regardless of what payment card company is processing the payment. There will also be a rich feature set of controls that allows the user to finely tune the use of the system covering access to personal data and location information on to prior purchase history.
Passbook displays an image that is related to the functionality of the items in the wallet. For example, a coupon has a serrated edge showing graphically that it is a discount. In another example tickets will have a half circle cut at the top to present the image of a Ticket Stub. Each item in the wallet will come with a number of user and merchant set perimeters.
We are really seeing the stage being set for the framework on how Apple will integrate with Visa, MasterCard and the other Payment Card networks.
Geolocation- The appropriate reward/incentive/gift card/ticket will be automatically presented for use as the iOS user enters the retail location. Passbook is integrated with the lock screen so that when the device is near a retailer, a message pops up alerting the user that he or she has a ticket or rewards card that can be redeemed. This very powerful feature will allow users to have instant access to Passbook functions, however in the future retailers will be able to push offers/credits/incentives to users based on a number of criteria including location.
- Starbucks will integrate their wildly popular Payment System that will open a card in Passbook app when within a preset distance from a store location. The users will have instant access to the Starbucks Payment Card barcode and present the iPhone to scan as normal.
- Target will be able to present an instant coupon as the user enters the store. The can also notify the user of the balance on registered gift cards.
- When entering an Amtrak train (CalTrain, Path, Subway) platform, Passbook will notify the user of the amount of credit/rides that are available and present a barcode to be scanned by the ticketing agent.
- Eventbright, for example could create a "daily deal" integration to help fill local events in the last days or hours of the event maximizing attendance.
Live Updates- All cards will have a dynamical update function that allows for up to the second changes to be made and pushed to Passbook and through the a standard iOS notification. Using geolocation and live tracking it will be possible to allow tickets
- Virgin America may need a boarding gate change and they can push an update on a Passbook ticket with the user receiving a notification.
- Target will be able to dynamically update the amount on a Target gift card with-in seconds.
Calendar and Reminders Intergration- Passbook will have synchronized tickets and offers with the Calendar and Reminders apps. This will make allow for future events to have a card Passbook that will notify and activate at an exact date.
- You can purchase an airline ticket that has date exclusions with reminders that can be set to notify you when you are in an open use date.
- Through the calendar invite function you can push event tickets to friends to RSVP and attend.
With just these basic features combined there will be a rather rich user experience. As developers extend use cases and Apple extends more advanced functionality and integration we will witness a spectacular platform for new wallet/payment innovations. There is even a whimsical shredder that virtually "shreds" as a reenforcement for a card deletion from Passbook.
Apple will be very pragmatic and practical in using technology. Absent in this version is any mention of NFC technology. This is not at all surprising as Apple has not yet released an iOS device with NFC, however there is little doubt that this is on the way. Apple is using the simple bar code on the iOS screen for redemption. There will also be other server based ways to access cards on the user’s iOS device through the API that would activate via just Geolocation. All of this integration is just dead simple and just works.
When NFC is released on the next iPhone we will see far deeper integration to retailer’s existing payment systems through NFC readers that are being rapidly deployed at the larger retailers as a part of Visa’s and MasterCards mandate to have a high degree of EMV and NFC acceptance by 2014. There will be financial and liability inducements to merchants to adopt upgrades to the existing payment equipment as nearly 100% of US payment cards will have EMV and NFC by 2014. There is nominal costs of less then $100 for these upgrades for most merchants and in many cases the upgrade will be free. Apple will be at the tip of the spear with NFC integrated into the iPhone just as more NFC systems will be in use at merchants.
Passbook And Payment Cards
Thus it is just a matter of time before we see the Payment Card integration of Passbook (with a slight name change) in the future. At this point Apple will have no desire to replace Visa and MasterCard but to become a conduit for these existing services. Apple’s own iTunes accounts will be available for retail purchases at the Apple store, however there is little chance that iTunes will ever become a retail payment system.
Siri + Passbook, A Transaction Completion System
In my post, Will Siri become a transaction completion system? I spoke to how Siri will become a transaction completion system. In this use case one could say "Please order a Venti Macchiato and pay with my Starbucks payment card. Leave a 10% tip.". This would be theoretically possible with the iOS 6 release of Siri and Passbook when it hits the market.
The Passbook Conduit, Disruption Not Needed
Passbook is a platform for innovation and is a very bold move that will impact any company wishing to be a part of what is currently called the “mobile payments” market. Apple is wisely choosing a path to work with rather then against existing infrastructure. I have advised far too many companies that have been wrongly convinced that there is true “disruption” in the mobile payments industry. Some startups have burned so many bridges in believing they will be disruptive that they have simply no path back to working with the many companies Apple is choosing to work with. The idea that there would be disruption in Payments has wasted the talent of some of the best people in tech by focusing on the wrong "problems".
Game Changer But Not Game Over: A gold rush Opportunity
Passbook will have a direct impact to all existing and startup companies that are in Payments, gift cards, loyalty cards, reward cards, incentive cards and ticketing. Over time the impact on the Google Wallet, Pay With Square and PayPal Here/Retail will be rather significant. I would also add any company that create discounts and offers to consumers as Passbook will be the central hub for this activity in iOS. I however can see 100s of massive opportunities for existing and startup companies to work in and around this new Apple ecosystem.
Very much like the app store, Apple will actually liberate 1000s of new ideas and startups. Companies that have been working with me over the last few years will likely be some of the first to announce product into this new ecosystem. If you had dreams of spectacular wallet ideas, your platform has arrived. I am predicting a huge gold rush" opportunity in this industry as Apple fully deploys in to becoming the conduit of all possible transactions, not just Payments. We have only seen the tip of the iceberg.
Apple has a rather long history of changing the business plans of even the most successful companies, today we are seeing this again. Passbook will render irrelevant and redundant perhaps dozens of products in the market and not yet to market.
Some may claim that this move by Apple is minor at best and perhaps ignore the true gravity of Passbook, however history will show this would be a regrettable position to take; betting against Apple.
...Taken from Brian's Q&A on Quora