There is great anticipation that the forthcoming Apple Pay will finally herald the death of magnetic stripe credit cards in favor of a more secure smartphone based technology. But before we praise Apple for singular genius, let’s realize there are a few fundamental truth about technology and it’s adoption by the masses. A lesson that can be useful for anyone inventing new tech.
Technology, like people, can sometimes be ahead of their time. We like to think innovation comes in strikes of lightning. Singular inventions that in a moments time change the world. But simply building a better widget is no guarantee for success. History has shown us time and again that better “specs” are not enough to guarantee success. Betamax versus VHS. Qwerty versus Dvorak keyboards. AC versus DC. CDMA versus GSM. HD-DVD versus Blu-ray. Format wars are famous in the tech industry. Sometimes the better tech wins. Sometimes cost kills the superior format. Especially true in the consumer electronics arena. But sometimes it isn’t as simple as cost.
More now than ever, technology and inventions build upon and interact with each other in ever more interesting, nuanced, and explicit ways. The forthcoming Apple Pay comes to mind as a perfect example of this. Near Field Communication (NFC) enabled payment technology has been available for years of the Google Wallet platform, but adoption in the United States has been slow. Many speculate that Apple Pay will “succeed” in popularizing using your cell phone as your credit card. And while adoption of NFC payments may indeed takeoff over the next year, it is unlikely Apple Pay is the sole reason for adoption.
October 2015 EMV becomes reality in the United States. What is EMV? According to Wikipedia “EMV stands for Europay, MasterCard and Visa, a global standard for inter-operation of integrated circuit cards (IC cards or “chip cards”) and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions.” In short, it is a better type of credit card the eschews the highly insecure magnetic strip for a much more secure electronic chip and a PIN number to authenticate the owner. As such, retailers will be ripping out their current Point-of-Sales (POS) technology in favor of the new EMV credit cards. For retailers that refuse they will become responsible for fraudulent purchases not the banks or credit card companies.
Hmmmm. 1 year before EMV becomes realit Apple finally, after years of refusing to add NFC, inserts the technology into their latest iPhone. Interesting. There is a “contactless” or NFC-based standard for EMV. Which just so happens is the standard Apple Pay is using. In addition, as of the time this blog was written t(October 2014) the financial security breaches of Home Depot, Target and other stores have created an environment conducive to change in the eyes of the public. The public is eager to adopt something, anything that is even a fraction more secure than magnetic strip credit cards.
And you know what? I am suspecting that Apple Pay will indeed succeed tremendously. As of the time of this blog most major banks, credit card companies, and major retailers are onboard. And more are signing up as the rollout of Apple Pay gets closer. Apple Pay will succeed, but not because Apple unleashed a great tech product or integrated the transaction pipeline, but rather because they are going to hit at a strategically perfect time.
Lesson learned for inventors, remember tech alone will not guarantee success. Entrepreneurs need to ensure characteristics like technical specs and cost are right for the market; but they also need to consider timing and ensuring that society and the market is ready to accept a new technology. Especially one that can potentially change the world.