Mobile payment technologies have an interesting and complicated relationship with local businesses. On the one hand, local mom-and-pop restaurants, shops, and services are probably the companies that you’d expect to adopt new payment technologies the slowest – particularly if those technologies require new point of sale hardware like an NFC reader. On the other hand, mobile payment systems could be poised to deliver a new wave of business to such local companies.
Making the situation more complicated is the fact that any mobile payment system (Google Wallet, PayPal in-store purchasing, or any system that Apple may be slowly developing) can’t be considered a solid winner or option unless that system strikes it big with local businesses. A system that only applies to large chains, like the in-store purchasing the PayPal rolled out to Home Depot and other retailers, can’t be considered mainstream unless it’s adopted very widely and by a significant percentage of small businesses.
Further complicating the relationship is the fact that many players in the race to create a true digital wallet are on focusing widely varying options for small and local businesses. That means that no one company is leading and no company really seems to have a consistent strategy for tapping this immense and important market.
PayPal is the closest thing there is to a leader in the space, but it’s also the most schizophrenic company in its approach to the small and local business markets. The company has too many different payment services and technologies that it’s trying to launch and market all at once. There’s the company’s online money transfers that can now be initiated from your iPhone as well as from your Mac or PC. There’s the PayPal Here credit card reader designed to compete with Square. There’s the mobile-driven PayPal local service that let’s you select items from retailers near you and pay for them via your PayPal account on your iPhone or other device, and then pick them up in person. All of those are small and/or local business options – but they aren’t really packaged as a single solution.
Then there’s all the NFC-oriented partnerships going on around the world between banks, mobile carriers, and device makers. You also have location and industry-specific options like Tabbedout. And you have organizations like Amtrak delivering their own apps and related payment systems.
With this much fragmentation, it’s easy to see why Apple is hanging back from lunching an iWallet.
The company is actually being very smart with its Passbook app. Passbook is a great tool for small and local businesses. It also offers Apple a way to build relationships with mom-and-pop companies. Once it has done so, Apple could easily expand those relationships and offer mobile payment services pretty quickly. With limited notice and lead time, Apple could then call a press conference and roll out its iWallet in full force days or weeks of the announcement. All before its competitors realize what’s happening.
From day one, your iWallet would work with most national and international retailers, regional chains, and local businesses. That would take the competition by surprise and could lead Apple to disrupt and lead the mobile payments market.