Apple Pay Loyalty Program Due to Start Within the Year

Copyright Cantockphoto/nikkytokApple Pay may have a loyalty program in place in time for holiday shopping.

Recent media reports have confirmed Bank Innovation’s months of reporting on Apple’s loyalty program, which the Cupertino,Calif.-based company has been quietly building. However, Bank Innovation has also learned new details on the technology behind what may power this loyalty program.

It’s important to note that some of this information has been collected since mid-August 2014 so Apple’s plans may have changed, but it is my estimation that the plans have stayed on this general path.

Digiday’s fantastic piece on Apple Pay’s monetization strategy via iAd is “pretty accurate” according to one source close to Apple and confirmed by others within the company.

The loyalty program looks like it will come this year, based on Digiday’s timetable. This was unexpected — many had assumed the program would wait until the launch of Apple Pay 2.0, tentatively scheduled for October 2015. It looks like market demand pushed the timetable up to this holiday season, which my sources within the retail industry have said for sme time is “super unlikely.”

Why? Because convincing retailers of a massive shift in user behavior before the biggest shopping period on the calendar is pretty tough to do. Very few companies can do it, and this is the beauty of Apple Pay — Apple didn’t really have to convince merchants to add new registers, since the EMV liability shift in October 2015 is making them do that anyway. Apple convinced merchants to partner up on these kinds of innovative mobile wallet/loyalty projects that merchants had held out on for years.

As for details on the program, sources tell Bank Innovation that it will probably utilize Apple’s iBeacon program, which is why Apple started selling — and possibly giving away free to select merchants — the iBeacons a while ago. It can also pass richer data than an NFC connection, according to experts who asked to remain anonymous due to the secrecy of the development behind Apple Pay.

Here’s how a source described it back in August 2014:

One way they’ve [Apple] thought up is, say you’re in a Duane Reade, hypothetically. You get a push notification from Pepsi that they’ve worked out a deal with Duane Reade that you can get a free case of Pepsi. Just pick it up and use Apple Pay at the counter.

This is plausible and could be great for bringing consumers and retailers together. It will drive user adoption to Apple Pay while also paving the way for other NFC-based solutions, like Google Wallet. (Sources say that Apple initially pitched a BLE-based solution, but financial institutions shut that down quickly because it wasn’t precise or ubiquitous enough.)

Correspondents in Europe say that our trendier counterparts overseas have already integrated BLE into their daily lives. Everywhere they go, an app store trigger pops up into their lock screen. It’s not an unpleasant experience at all, from what I hear.

So get excited for the future of payments, its almost here.

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