Apple Pay Should Pair With iBeacon

The last few years Apple has invested in the retail industry, primarily through the launch of Apple Pay and iBeacon. Both technologies address separate challenges for the customer experience and the store and they show a massive potential in revolutionizing our real world shopping experience.

November 29, 2016

Share this article

This article originally appeared in MediaPost Nov 21, 2016.

In October 2014, Apple launched Apple Pay. Large brands such as Starbucks, Delta, Kohl´s, KFC, JC Penny have adopted the technology, but Apple Pay has yet to see massive adoption. A year earlier, Apple launched iBeacon. The technology is still in its early days, but growing rapidly and according to Proxbook more than 8 million beacons are deployed globally. The forecast in 2021 is a massive 500 million beacons.

What is Apple's big play here? Are those two revolutionizing technologies really meant to live in solos or have they planned how they will work together to accelerate the growth and adoption of both? 

I believe the latter and here is why.

1. Apple Pay and iBeacon are the perfect tag team

iBeacon and Apple Pay both aim to improve the user experience in the physical domain. The two technologies address two different ends of the customer journey, the beginning, and the end. iBeacon to be used as a trigger to get people to the store and enrich the shopping experience and Apple Pay as the final close of the visit through an easy and convenient check-out technology. 

The missed opportunity is to tie the two technologies together and create a holistic customer experience. If Apple and retailers want a higher adoption of Apple Pay, they should include iBeacon technology. As I walk into the store I want my payment apps to send me a beacon triggered notification with relevant information and product offers. As I´ve already been looped into a truly mobile experience I want the experience to be seamless and end on my device as well. I don't want to pull out my payment card. 

Apple Pay and iBeacon has to be a defacto tag team. Nothing else makes sense from a customer perspective. 

2. Apple Pay has a data challenge iBeacon will solve

Apple has been very vocal that they do not collect or share data from Apple Pay transactions. Tim Cook argues that people are not products and Apple does not know what you bought or where you bought it or the price you paid. Apple has never been in the business of collecting or monetizing data so this is not a surprise. But the real reason Apple doesn't do more with the data from ApplePay is that it can´t. The limitation lies in the technology as Apple Pay and NFC- based systems lack access to the product level. Some may argue this is great and privacy-friendly, but for the adoption and development of Apple Pay and is an issue. 

Without data from transactions and store visits, Apple Pay loses a huge part of its potential value towards retailers and consumers. Retailers rely on, build and improve their business based or customer and purchase data. And the trend among customers today is that they want the retailer to know them better and share data with them to get a better user experience. 

This is where iBeacon can complement Apple Pay. In comparison to Apple Pay, iBeacon can be enabled to collect data about customers interactions with beacons. The data collection is always opt-in and tied to the advertising identifier (IDFA), a privacy-friendly identifier Apple introduced around the same time as iBeacon was launched. 

Through beacon deployments, retailers and brands can collect data about people visiting their store and understand what they did in the store. iBeacon complements Apple Pay, allowing retailers to build and improve their business based on this information. In return, customers get a contextual experience enhancing the physical world they live in. 

3. One more thing...

Or, is there something we are completely missing here, but only Apple sees and has been working on for years? Earlier this year a new Apple device passed through the FCC and the device comes with both Bluetooth and NFC. We've earlier speculated if this is a new “iBeacon 2.0”, a new point of sales system or both. 

No other company is better at keeping secrets than Apple. Knowing what Apple plans to release is kept at 1 Infinity Road more safely guarded than the gold at Fort Knox and the rest of us just have to wait for the next Developer Conference or Keynote.

Meanwhile, there should be no doubt that iBeacon and Apple Pay will play an important role both individually and together, and accelerate each other's growth.