With two big wins so far this week, Apple Pay appears to be gaining momentum in the contactless mobile payment landscape. Coming on the heels of Monday's announcement that Discover will begin supporting Apple Pay this fall, Best Buy also said Monday that customers will soon be able to use the system to make in-app purchases.
Support for Apple Pay for in-store purchases will roll out later this year, the company added. The development is part of an ongoing effort to enhance the retail chain's mobile platform, Best Buy said.
To further drive its mobile ambitions, Best Buy plans to open a new technology development center in Seattle later this spring. The center will focus on mobile development, private cloud and omnichannel application development.
Still a CurrentC Partner
Best Buy's announcement is noteworthy because the company is one of the partners behind a merchant-led effort to launch a mobile payment system that would compete with Apple Pay, which became available last October. The Merchant Customer Exchange system has been beta-testing a system called CurrentC, which is expected to begin hitting some markets later this year.
"Best Buy remains a strong MCX partner and supporter of the CurrentC initiative," said MCX Chief Operating Officer Scott Rankin. "With that in mind, we understand -- and strongly support -- our merchant partners' quest to do what's best for their customers. As we have stated in past, we are of the firm belief that there need to be at least two-three major players within the mobile payments ecosystem for it to succeed."
We reached out to Jeff Shelman, external communications director for Best Buy, who told us his company continues to actively monitor MCX's pilot programs. Accepting Apple Pay was a decision made to give customers options to make purchases, he added. "There are certainly customers interested in using Apple Pay and we want to be able to serve them and allow them to pay in that manner," Shelman said.
'A Huge Catalyst'
In a blog post last week, MCX's Rankin said ongoing tests for CurrentC focus on three "essential consumer-centric elements: savings, convenience and security." The exchange's goal is "one scan to rule them all," he said.
"Despite the name, mobile payments are about so much more than simply eliminating the swipe of a credit card (which ultimately isn't that painful)," Rankin said. "Proven by the fact that pay-only solutions have been around for a while with limited mass-market appeal, consumers are demanding more than just a vehicle for payments; they are looking for a means to save time and money."
That means retailers have to think beyond the initial transaction to loyalty programs, coupons and payments, he added. "For consumers, integrating these features into the program lessens time in-aisle, eliminates the need to pass papers, cards and look up numbers and allows them to capture savings that have to-date been left untapped," he said.
As Rankin noted, a number of mobile payment systems have already been tried with mixed success so far. However, a study of Apple Pay users published last month by Phoenix Marketing International showed that Apple's system saw an 88 percent usage rate in its first four months, which was "a far higher conversion rate" than the approximately 50 percent usage shown for other wallets.
"It's pretty clear from all signals that Apple Pay continues to have momentum," Greg Weed, Director of Card Research at Phoenix, told us. The latest announcement from Best Buy was huge, he added.
With other new or revamped mobile payment systems yet to roll out -- not only from MCX, but from Samsung, PayPal and Google -- 2015 is shaping up to be an interesting year, Weed told us.
"A lot of new prospective entrants have not hit the market yet," he said. "Apple Pay has established a good threshold . . . and energized other wallets. It's a huge catalyst poised to change the dynamics of the whole in-store and in-app payment system."