My Take: Apple’s New Passbook

by Scott Loftesness on June 11, 2012

in Apple, Mobile Commerce, Mobile Payments, Mobile Technology, Mobile Wallets, Scott Loftesness

Scott Loftesness - Glenbrook Partners

This morning, at Apple’s Worldwide Developers Conference in San Francisco, Apple introduced a slew of new Mac hardware, new Mac Mountain Lion software and, perhaps most importantly for us in the world of mobile and mobile payments, iOS6 – the next generation of mobile software for Apple’s iPhone and iPad families. Oh, by the way, early in this morning’s keynote, Apple CEO Tim Cook also announced that Apple’s App Store now has over 400 million accounts with payment credentials on file!

While the new Mac hardware looks very impressive – especially that new MacBook Pro with Retina Display, I found the new features in iOS6 to be really interesting. These include a whole new Maps application, deep Facebook integration (mirroring what Apple had done with Twitter in iOS 5), and significant enhancements to Siri, Apple’s voice-driven intelligent personal assistant first introduced with the iPhone 4S last fall. An impressive set of upgrades and new features along the lines of what we’ve come to expect from Apple!

But what really caught my eye – and stirred up some buzz among the payments geeks in our partnership – was Apple’s announcement of a totally new feature for iOS devices called Passbook – one that’s intended to make it much easier for mobile users to be able to quickly access things like boarding passes, movie tickets, retail coupons, loyalty cards, and more.

Passbook represents a new, operating system-level feature that pulls together storage of these kinds of items in a new way – instead of having your airline boarding pass, for example, tucked away inside your airline’s mobile app on the fourth screen of your iPhone, Passbook provides the mechanism (through a new developer interface called Pass Kit) for the airline’s app developers to much more conveniently store your boarding place in a system-level application that’s more readily available – one which can even be automatically triggered to be on the lock screen of your phone when you walk into a venue.

As an example, Apple Senior VP Scott Forstall, in his demo of Passbook, showed a Starbucks stored value card inside Passbook. Once the card is installed in Passbook, as you walk into your local Starbucks your phone uses location-based technology to determine that you’ve done so – and an icon for the Starbucks card pops up as an alert on your iPhone’s lock screen. From there, you can simply unlock the phone and immediately pay using the stored value card. None of the hassles of trying to find the Starbucks app on your phone, open it, etc. And, the balance information will be dynamically updated on the card after your purchase. Others may want to take heed from this use case!

By making available easy ways for developers to participate in the new Passbook ecosystem, we can expect mobile applications that generate these kinds of tickets/passes will quickly be updated to support Passbook when iOS6 becomes available this fall. Apple made a pre-release developer version of iOS6 today to encourage developers to begin to explore these kinds of new features.

In terms of the implications of Passbook for payments, it provides a very useful bridge for closed loop environments – enabling app developers to be able to generate passes/tickets for convenient storage, access and dynamic updating on customer’s mobile phones. But, it’s important to understand that, as announced today, Passbook appears to be a “closed loop” solution – where the acceptance of the passes/tickets stored in Passbook is also the responsibility of the app developer (think “merchant” or “airline” for now).

In other words, Passbook today is really just a toolkit for application developers. It is not a revolutionary new mobile payment system from Apple that the industry has been speculating about. (You know, the one that brings with it access to hundreds of millions of payment credentials already on-file in the cloud.)

That said, Passbook is an important step forward in providing a system-level function (a “wallet” with services) to developers for closed loop applications. It will be fun to watch what emerges from the creativity of iOS developer community as they explore how value could be created – and exchanged – using the new capabilities of Apple’s Passbook.

What do you think? I would love to hear your thoughts here in the comments below – or on Twitter (I’m @SJL on Twitter).

{ 3 comments… read them below or add one }

james christensen June 12, 2012 at 12:37 am

Scott, great coverage thanks.
I beleive this is proof the NFC wave is not needed to have a payment, loyalty, mobile feista. Marketers have been playing with QR, coupon and ticket companies have been printing from home, and closed loop gift/payment has been gaining. Now Apple has confirmed the mobile device is ready to carry the medium.
With this confirmed we will see more things like real time communications to consumers before (location based) and after (customer service, upsell, gamification).
Do you think second source confirmation will now gain ground for payment security for alternative payments/ACH? i.e. send SMS to phone requring real time response to authorize

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tom calvert June 13, 2012 at 7:02 am

Thanks for the summary and insights. It is interesting to speculate where Apple will go. One can’t help but admire their approach….as always, the end user experience is king. Oh, and by the way they continue to add consumer payment accounts along the way via iTunes and continue to build equity or confidence with consumers that Apple can be trusted with handling payments from their digital devices. However, because of their ability to control their own “platform”, they are not rushing to bring out a “wallet” but seem to be inexorably building their own infrastructure and development community to enable a compelling end user wallet experience. What I haven’t seen is what if any they are doing on the merchant end of the payment equation. Perhaps this is the next step?

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Scott Loftesness Scott Loftesness June 13, 2012 at 7:43 am

Tom, re the the merchant acceptance end, I agree. But we can clearly see the trend of tablets and smart phones displacing traditional POS as acceptance devices (Square et al) along with Apple’s own EasyPay solution deployed in its stores in the U.S. Wonder what a consortium of merchants might do to collectively address acceptance? We live in interesting times!

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