For companies like Uber and Lyft, which need the payment process to be as seamless and invisible as possible, Apple Pay
might seem like an answer to their prayers. In fact, Apple Pay and rival mobile wallets fall very short of delivering what the two ride-sharing heavyweights need.
“There’s been a strategic error on the part of … the ‘Pays’ — whether it’s Android or Samsung or Apple — in some ways, in marketing the physical point of sale ‘Gee whiz, tap your phone’ aspect of the wallet, when in reality that’s not the thing that’s broken,” said Brian Crist, chief payments counsel for Uber Technologies, at SourceMedia’s annual PayThink conference.
The various wallets don’t advertise their interoperability with other payment methods, even though merchants and issuers know they play nice with one another — how is a consumer to know Visa Checkout accepts non-Visa cards, Crist asks. This issue could easily mislead consumers into thinking they can’t complete a purchase without going to a different merchant, he said.
“In creating this brand differentiation, they’re actually obscuring the fact that there are standards underpinning this stuff,” Crist said. “That’s why the existing incumbents that have your card on file like Amazon still kill it in the mobile space.”
The situation is similar at Lyft, which views the payment as a point of friction even though it happens far below the surface of the user interaction.
There are three points of friction to requesting a Lyft ride for the first time, according to Ashwin Raj, Lyft’s vice president of payments, who also spoke at PayThink. Those pain points are downloading the app, setting up an account and adding a payment card.
On the mobile device, adding a payment card is tedious enough that if the user has other options, he or she may opt for an alternative rather than update the card and request a Lyft, he said.
“It becomes a point of friction, not only on the first time,” because eventually the card on file might expire or get canceled, Raj said. And the user will only be prompted to update the card when requesting a ride. “You’re not sitting there on a Sunday evening thinking, ‘I’m going to update my Lyft card,’ ” he said.
Apple Pay would seem to solve that problem by using the card on file with Apple, but the trade-off is in shifting the customer relationship to Apple, thus depriving Lyft of other data that it can use to determine the rider’s ability to pay.
“We don’t have a direct relationship at that point with that customer who’s signing on using Apple Pay,” Raj said. “All we know is a token, at that point. That is less preferable.”