Shortly after Apple's (Nasdaq: AAPL) launch of iOS 6 on Wednesday, developers are already flocking to the new operating system's organized mobile payments storage application, Passbook. With major online ticket retailers and services like StubHub, Ticketmaster, and Fandango all jumping on the Passbook bandwagon, Apple may have gained an early lead in the mobile payment marketplace even as new enterprising operations like Square and eBay (Nasdaq: EBAY) try their hands at integrating credit card transactions with smartphones and mobile devices.
Despite the iPhone 5’s splashy debut in the smartphone market on Sept. 12, one key feature Apple left suspiciously absent from its new and improved device was near-field communication (NFC) technology, which was long-rumored for the device. NFC chips are included in many other popular smartphones currently on the market, and many tech industry analysts predicted that if Apple had given its stamp of endorsement to the technology, it may have established the feature as the definitive industry-wide standard.
But, of course, Apple chose not to include an NFC chip in its new device, instead opting to make a run at establishing its own unique brand of mobile transactions with the Passbook app, a new feature that allows iPhone 5 owners to store all of their mobile tickets, coupons, and related material in one location for easy access simply by clicking "Add to Passbook" after making a purchase online.
Announced earlier this week, a number of high profile online merchants such as Fandango, Ticketmaster, and StubHub are already jumping on the Apple bandwagon.
“StubHub has always used innovation to give fans more freedom and convenience to enjoy live events, and we will continue to develop technology and work with those that share this vision,” Chris Tsakalakis, President of StubHub, said in an emailed statement announcing the new iPhone-specific app. “Through our integration with Apple’s Passbook, fans will not only be able to use their iPhone or iPod touch to store their tickets, but to enter an event as well.”
The advantage Apple already has in this marketplace is the benefit its ecosystem provides any prospective merchant. While the iPhone 5 may not lead the global market in terms of pure sales numbers, Apple has still managed to establish itself as the leader in terms of third party app development. This means any company trying to capitalize on the benefits of mobile payments will try to master the Passbook before it even gives another smartphone (or its operating system) a second thought.
“We started introducing electronic ticketing, enabling it on people’s smartphones, last year,” said StubHub’s Product Director Mats Nilsson in a phone interview. “Passbook is just another avenue for us to ensure that customers can get ahold of their tickets anywhere that they’d like to.”
For an online ticket marketplace focused on reselling products like Stubhub, the benefits of the new technology are obvious. Enhanced integration between user’s products and their payment options allows them to trade tickets instantaneously without having to worry about exchanging physical copies or scalpers.
“It’s a pretty big deal because as a consumer it allows you to have all of your tickets in one wallet,” Nilsson added. “It’s an elegant solution, enabling users to walk into venues with only their phone.”
Greater speed of money in this case also enables greater spontaneity in purchases, something that StubHub thrives on, given the fast pace with which customers race to find last-minute seats at their favorite concert or football game.
Nilsson said that while mobile is still only about 20 percent of StubHub’s larger business, the company expects smartphone trades will come to equal, if not outpace, other web-based purchases in the near future. Asked if StubHub had any plans to expand into other forms of mobile payment in the near future, Nilsson said that the company remained open to the possibility but still saw Apple as the current leader.
“I think there will be an expansion in terms of mobile payments when other companies come out with ‘digital wallets,’” he said, listing fellow eBay subsidiary PayPal’s new card-reading dongle as a potential pioneer in the field. “But for now, the one that’s enabled us to do anything with it currently is Passbook.”
Entering the market early can only give Apple a solid lead in this expanding area of ecommerce. The only limitation with Passbook currently, of course, is that it doesn’t immediately allow users to make a payment. But as the company freely admits in its explanation for why this feature was omitted, many customers still aren’t completely comfortable handing over their credit card information to mobile devices which can easily be stolen, lost, or hacked through an insecure wireless network.
The benefit of offering promotions and deals instead of simply payment options, however, is that it allows developers to “personalize [the apps] to our brand,” a Major League Baseball media executive explained to VentureBeat.
“Our customers love Apple products,” said Starbuck’s Chief Digital Officer Adam Brotman to VentureBeat in explaining its new Passbook app. “We like to go where our customers are and do things that enhance their experience and connect them to the brand on devices and with platforms that they are already using and already love.”
And while Apple’s new proprietary map features have received more negative reactions than the smartphone developer is usually accustomed to, it’s easy to imagine the confluence of benefits this would offer local businesses and curious consumers alike in the future.
“We want to enable people to discover events,” Nilsson said of Stubhub's future goals on the smartphone. “Tickets [give] access to the event, but we don’t just want people to come to StubHub just to get tickets to the Giants’ game.”
The iPhone is already the industry standard for developing social networking apps -- Mark Zuckerberg of Facebook (Nasdaq: FB) recently recovered some of the ground lost so far at the stock market by investing more heavily in mobile-specific features for the iPhone after all, particularly in the iPhone 5. And while it may not lead in terms of enabling the fastest possible mobile payments, Apple’s new ticketing innovation could nevertheless claim the market in defining overall mobile consumption patterns.
“We want to be that hyper-local friend or buddy that you have in your pocket,” he concluded, “and you walk around with so you can figure out what to do.”