Integrated payments' advantage over Apple Pay: Consumer data
December 09, 2014

There is a lot of talk surrounding the rise of Apple Pay, and how it will take over mobile payments eventually. However, after a much-hyped release, the new technology has fallen quiet. The main reason is that major retailers, including Wal-Mart and Best Buy as well as CVS and Walgreens, refuse to accept the technology for the time being. Their motivations vary from retailer to retailer, but many are looking to use integrated payments systems like mobile point of sale terminals and readers instead. With that said, there is one thing that Apple Pay is lacking that makes retailers prefer the latter over the former: customer data.

The way to run a business
In recent years, consumer data has become not only a major but necessary component to run a retail store of any kind. By tracking what kinds of purchases customers make, a store can figure out what items to stock, what things sell well when and how to handle certain days, weeks and months of the year. Integrated payments systems allow them store this data for analysis. In addition, it can be used to instigate effective loyalty reward programs, which can mine further data to develop a loyal customer base.

For unexplained reasons, Apple decided against launching Apple Pay with any method of tracking customer data. According to Mobile Payments Today, the likely motive is that customer data is tokenized, or masked, in such a way that isn't viewable to the merchant. The issue Apple raised by choosing complete tokenization over data sharing is one that has been deeply affecting retail for sometime: With so many major data breaches, how much privacy is a store willing to give to consumers while getting the information they need to better run operations?

There are other issues that integrated payments systems address that Apple Pay does not. The latter technology requires new equipment in the form of expensive contactless readers, as noted by VentureBeat. In turn, it requires additional employee, which costs retailers time and money. Integrated payments systems lack these problems, since many only require a tablet or smartphone with attached card reader. This makes the programs easy to use for any employees, and may even allow employees to just use their own devices to complete transactions. Apple Pay also fails to deal with a core problem that hurt retailers every day: interchange fees. These fees can cut deep into the pockets of stores, thus minimizing their effectiveness to run a business.

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