The Apple passbook – friend or foe?

28 June 2012 Stephen Hay Regional Director, APAC

Apple recently announced at its Developers Conference a new application called Passbook that will sit on the next release of its iOS 6 operating system. That’s the one that iPhones and iPads use.

Passbook is essentially a mobile wallet, although unlike normal wallets, it does not focus on money and payments, well not initially, at least. The new Passbook will provide for all the other stuff you carry around in your wallet or purse; loyalty cards, coupons, movie tickets, boarding passes and so on, helping to organise them and making sure that they are accessible when you need them.

How does it work?

Initial previews suggest it contains all the best of Apple’s great design and intuitive user experience. Items within the wallet are easily identifiable, organised, and accessible. That’s more than can be said for the average real world wallet. Select an item from the Passbook and it contains a readable QR or barcode that lets you redeem a coupon, board a flight, present a store card, or enter a movie theatre. Where appropriate, the pass being digitally shredded after use, if say it was a one-off promotion.

As you move around, your Passbook keeps track for you. Walk past a store, the geo-location function tells you that you have discount voucher for that store. Gate change at the airport, no problem, your boarding pass updates itself and sends you a quick push reminder message.

What about payments?

The first release will not have payment capabilities, which is what our real world wallets mostly do for us still. We are not quite ready for that yet. The iPhone does not yet have NFC that allows a contactless connection from the phone to the till. And the retail networks need to upgrade their infrastructure to allow us to pay that way.

It’s on its way, being led by the payment networks like Visa and MasterCard and you can be pretty sure that once that is all in place a digital Visa card or MasterCard will slide right into that Passbook in your iPhone.

So far so good, but will it all work?

Will it work?

With Apple’s iOS global market share stubbornly stuck at around 20 percent, Passbook is perhaps not destined for global domination quite yet. There is room, indeed a need, for other players and for neutral standards across platforms and devices. This is important because businesses want utility – the ability to address the needs of all mobile enabled customers, without the need to develop across multiple platforms, standards, or interfaces. And as consumers, none of us want to carry around two wallets, one for one set of stores and one for another.

To Apple’s credit, it has published the APIs and standards for the Passbook to make it as accessible as possible and to encourage adoption. But having committed to Passbook, it is hard to imagine that they would then allow a platform neutral competitor onto their phones or their App Store. Are we seeing the beginnings of an unhelpful format war, like HD DVDs and videotapes before that?

There are certainly attractions for consumer brands. Take airlines. They are all moving toward a paperless customer experience and a mobile boarding pass is a part of this. But currently everyone is doing their own thing, their own apps, emails, MMS messages and so on. A unified approach would really help, but airlines tend to like working based on agreed global standards. Everything from the layout of your boarding pass to the size of your meal tray has been defined somewhere. Passbook could help if it can work with or help to establish these standards, but if it becomes one of many competing wallets, proprietary and inflexible, we may find industries less willing to adopt it.

The fight for the customer

For a number of years now, there has been a quiet running battle for the heart and mind of the customer. Everyone wants to have the ability to influence customer behavior. This often entails the development of a direct relationship, hence CRM and loyalty programs. While the Passbook is a useful tool, it takes a higher degree of control over what that customer does when, for example, they are or near a point of sale. Giving Apple that that control and potentially taking it away from the retailer.

This intermediation of the customer relationship is already a crowded space, development of electronic coupons is a good example. With Apple’s entry into the space with the Passbook, customers are potentially unwittingly putting that final link between the consumer and the retailer into Apple’s hands. This may well prove an opportunity for new brands to access, at a price, new customers, but may come at the expense of an existing brand that already sits in your Passbook. Customer channels have always been neutral. Apple does not for example decide what email it is going to deliver to you. But with Passbook, brands may find themselves in PPC style bidding races to ensure they are able to get their message across.

This is a dilemma for brand owners. Join Passbook and potentially pay to access your own customers while lose some sovereignty over them, or stay out and be denied access to the tools and the benefits it offers.

Consumer acceptance

Finally, will consumers accept it? Notification of a gate change at the airport has got to be a good thing. But do we really want a push message offering 2-for-1 cappuccinos every single time we walk remotely close by a coffee shop? Will the offer be lost in the white noise of those oh-so-important push messages we already get? We are moving to an age of greater customer control and Passbook might want to include some user controls that allow us, the consumer, to tell it what we think is important and truly time or location sensitive.

So congratulations to Apple for something that looks great, is well thought through, and has potential to do something really useful and beneficial for consumers. But, as a consumer, I only want to use one digital wallet. As a business, I want to deal with common standards and platforms. And as a marketer, I don’t want to lose my ability to drive my own relationship with my customers. If Apple makes sure we can address all of these needs, we may well have a winner on our hands.


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