iPhone Passbook: Six months on and it still disappoints

iPhone Passbook: Six months on and it still disappoints

Summary: The Passbook feature in iOS 6 is one of the iPhone's most interesting and potentially disruptive software elements. So why has it generated so little excitement?

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Passbook marked a significant, and potentially disruptive, addition to iOS, but six months on from its launch, the iPhone's digital wallet is yet to generate any significant momentum.

The Passbook app for iPhone made its debut back in September with the launch of iOS 6. The central idea: that Passbook will store your loyalty cards and vouchers in a single digital wallet which can also work with other apps on the iPhone.

As well as reducing the clutter of plastic cards in your wallet, Passbook is also widely seen as Apple's first step towards turning the iPhone into a payments mechanism - a potentially enormously lucrative, though still nascent, market.

Passbook in the wild

Apple allows businesses to integrate Passbook with their own apps to take advantage of features such as location awareness - so, for example, your coffee shop loyalty card will pop up on the iPhone lockscreen whenever you pass your favourite branch. But how many companies are actually using Apple's digital wallet?

In the US app store, there are currently only around two dozen apps optimised for Passbook, including Starbucks, LivingSocial, Amtrak, Walgreens, Office Depot and Sephora To Go.

In the UK app store, that shrinks to a mere five - iHotel, United Airlines, Lufthansa, American Airlines and Starbucks.

However, new Passbook apps are being released: Dunkin' Donuts 'Dunkin' Pass' for example was added to the US store last month, allowing customers to pay for doughnuts and coffee with their iPhone.

And there are other gradual steps forward in terms of Passbook adoption: Major League Baseball trialled Passbook for electronic ticketing late last year and found that in a four team trial, out of the 1,500 e-ticket buyers, 12 percent chose to receive their tickets via Passbook. This year, 13 teams will allow customers to buy paperless tickets and redeem them through Passbook, according to reports.

Companies reluctant to integrate their apps fully can still use some Passbook features - for example, travellers checking in at the Virgin Atlantic website are given the option to send their boarding pass to Passbook. If they choose that option, they'll receive an email with a Passbook attachment.

A slow start

Despite the handful of Passbook-using companies, progress remains slower than might be expected for such a high-profile addition to the iPhone's software.

Ben Wood, chief of research at mobile industry analyst CCS Insight, told ZDNet: "I was extremely upbeat about the prospects of Passbook. From my perspective, it's a huge disappointment that it hasn't delivered against the expectation that Apple set. For Passbook to stand out you need hundreds of companies involved." (Apple declined to comment on Passbook for this article.)

Woods wonders if Passbook has had to take a backseat while some other elements of iOS 6, most notably maps, have been prioritised for development work. However, Apple needs to think about how to reignite consumer interest, he added, warning that if Passbook appears to be gathering dust "then there's no incentive for consumers to embrace it at all".

starbucks-passbook-ios-6-ogrady-3
Starbucks Passbook app, one of a handful available. Image: Steve Ranger/ZDNet

"You've got to have a huge number of partners to make it worthwhile - 20 in their home market seems very small number indeed," he said.

While Apple may not have cracked it yet, there remains a huge potential market for Passbook, even if it only ever focuses on vouchers (Passbook can store companies' discount coupons, for example) and loyalty cards. These are vital weapons for retailers struggling to attract customers, and putting them on a phone and providing a richer experience is one way for retailers to get a better insight into customer behaviour, as well as building loyalty.

Despite Passbook's slow start, the market is growing: the number of discount coupons redeemed through mobile and tablet devices is expected to double this year to 10 billion as savvy shoppers hunt for discounts, according to Juniper Research.

And, while mobile still accounts for a comparatively low volume of coupons issued (compared to newspapers and magazines, for example), mobile coupons are much more likely to be used, with an average redemption rate of 10 percent, compared to traditional print media, with around one percent or less.

Juniper said Passbook is expected to act as a catalyst to both mobile coupon deployments and adoption — but retailers' reluctance to upgrade their sales terminals to allow vouchers to be redeemed is creating a bottleneck and slowing use of such coupons.

This lack of infrastructure is one of a number of issues holding back Passbook.

At the most trivial level, the iOS icon for Passbook looks like a pack of cards, suggesting gaming rather than digital wallet, meaning it's more likely to catch the eye of poker players than thrifty shoppers.

It's also clunky to use, especially for those new to the service. When it first launched, there was a handy list of Passport-ready apps displayed inside the app. That list disappeared after users started using Passport, leaving them adrift and unsure of which apps to choose. (Following a software update, this list is now a permanent fixture, however.)

The benefit to the consumer needs to be better defined too — removing plastic from a wallet isn't quite enough to make people jump through the hoops that Passbook demands.

On the business side, some organisations that have held back will be cautious about saying goodbye to that chunk of physical branding in your wallet.

Retailers like shoppers to carry loyalty cards as a permanent reminder of their offerings, and will be concerned about losing that direct connection to their customers to Apple. Integration is costly as well and, while the iPhone demographic is attractive, there are far more non-Apple using consumers out there.

Passbook's rivals

However, while Passbook may have made a slower start than some may have expected - and Apple may have hoped - it hasn't stopped other smartphone manufacturers building similar digital wallet applications.

Samsung has recently unveiled its own digital wallet and Microsoft's Windows Phone also has a wallet app. Various banks and credit card companies are in the mix too, wary of losing their lucrative position in the payments game.

All of that means retailers and others won't feel the need to automatically support Apple's app.

"If you're an airline, at minimum you have to do this for Apple and Android. Things have changed over the last year, Android has got a lot more momentum, and so it may not be the slam-dunk that Apple thought it was originally," said Woods.

But despite the slow start, Wood still sees potential in Passbook. "The philosophy around it is still fantastic, it is an excellent idea and given the number of people that have an iPhone and that the demographics of iPhone owners are up in that top quartile of spenders then its the right place to be sticking your loyalty card," he said.

Passbook may have got off to a slow start but it's going to be a marathon ahead, not a sprint.

Topics: Smartphones, Apple, Apps, Mobility

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  • Well the main issue with passbook is

    If you have more than one iPhone linked to Apple ID for purchases on iTunes and AppStore, and if you enable Passbook and add apps to it, every iPhone user with that account gets updated and most of the iPhone users don't know how to seperate them. Until that issue is educated or resolved, passbook adoption will be slow.
    Ram U
    • Apple ID

      No sure I understand. Passbook is not linked to your Apple ID for purchases. My family shares the same ID for purchases and my wife and I haven't had any issues with Passbook. You might have problems if everyone in the family is sharing an Apple ID for iCloud. But if that's the case then you'd be having issues with more than just Passbook.
      jtfields
    • Apple ID

      No sure I understand. Passbook is not linked to your Apple ID for purchases. My family shares the same ID for purchases and my wife and I haven't had any issues with Passbook. You might have problems if everyone in the family is sharing an Apple ID for iCloud. But if that's the case then you'd be having issues with more than just Passbook.
      jtfields
    • Typical ZD Net

      I post nearly daily how ZD Net paints Apple and Microsoft in a negative light and Google in a positive one, no matter what the truth is, again here it is, Will a ZD Net Ed. Please reveal what financial ties they have with Google, C'mon, show some integrity for a change.
      cheydaddy
      • This is funny!

        I mean really funny, I'm no Apple fan, far from it but this exact line was used in a Win 8 article saying ZDnet was anti MS. Guess I'll go and find the post claiming ZDnet is anti Linux or anti Google just to top it all off.
        lol
        martin_js
  • NFC?

    Steve, you failed to mention that Apple has ignored the usefulness of near field communication, which just about every other phone has now. Having loyalty cards and vouchers on your phone is all good, but it seems to stop a step short of being useful in the absence of NFC. Having transactions go from phone to retailer directly is so much better than having Apple and iTunes as a middle man. Soon there will be digital cash too. NFC right now is the only way to do that without having a bank or corporate entity track your movements. Perhaps the iP 5S will have NFC. Then everyone will have it and perhaps the technology will be free to advance.
    jefftam68
    • NFC has an even slower uptake

      than passbook.
      baggins_z
      • Less so in Europe

        Any major city in Europe has plenty on NFC terminals at shops, toll ooths, buses etc.
        sonnet37
        • Same in Canada

          Lots of tap-to-pay terminals around.
          TheWerewolf
    • You need to read up on Passbook...

      "Having transactions go from phone to retailer directly is so much better than having Apple and iTunes as a middle man"

      Shows you have no clue how it works or what it is.

      But even then, Passbook is far outpacing NFC in adoption and usability.
      Bruizer
      • Passbook

        Bruizer, you are right, I don't own an iPhone and I really don't know how it works. It just seems that everything that goes on your phone has to somehow go through your Apple ID or iTunes by default which means that Apple has a record of it in some form or another. Same with Google - Everything you do with Google gets sold to marketers for their viewing pleasure. But again, you are right I really don't know. I'm making broad assumptions.

        As far as Passbook outpacing NFC, I suspect NFC will take off once Apple invents it.
        jefftam68
        • your right

          Regardless of who has the top selling phone iphone leads in minds share amongst CIO, NFC will gain traction if Apple put it in but until then uptake will be slow (though I'm still not happy with it the security of it for payments.

          As for passbook, its awful at the mo, I've got a 4S and have just never used it
          the.nameless.drifter
    • NFC emerging?

      Yes, it's a good point - there's no NFC in the iPhone (although Samsung, BlackBerry and others do have it). NFC still hasn't managed to break through as a technology, although if it does (maybe over the next 3-5 years) that will make a difference.
      Steve Ranger
      • Maybe NFC Shouldn't

        My understanding of NFC is that it is a wireless URL (URI?) exhchange, effectively a wireless QR code.

        The problem with NFC is that it sends your device to a URL. If this URL is malicious you are going to have a security breach.

        What's more it is possible to place other tags near a genuine NFC tag and hijack the devices using an otherwise genuine NFC tag.

        Passbook on the other hand displays a barcode or QR code for the terminal to read. It cannot be used to hijack the user's device.

        I do not want NFC on my device as I would be authorising an unknown access by my device just to make a transaction or to read a loyalty card. This is not good.

        When Apple does something sensible some idiot says something like "NFC will take off once Apple invents it."

        On the other hand many technologies have taken off due to support from Apple, think SCSI (invented by NCR) or USB. And Apple doesn't claim to have invented either.
        richardw66
  • The main issue is that Apple users are morons.

    How could they possibly hope to comprehend the usefulness of anything which produces a blanket improvement on their life when they are too busy watching the bachelor and playing angry birds? iOS users are not worried about convenience, usefulness, or productivity, they are worried about owning an iPhone. Apple should take a tip from this and raise the price $100.
    qwetry
    • What a...

      ...moronic post.
      jtfields
    • The main issue is that qwerty is a moron

      Point by point because even a troll needs a meal:

      "How could they possibly hope to comprehend the usefulness of anything which produces a blanket improvement on their life when they are too busy watching the bachelor and playing angry birds?"

      Wow, way to completely pigeonhole an entire segment of a population. That sort of thinking is borderline racist... not saying that not liking iPhone users is racist but the sort of "loic" you display is the same as racists. And BTW I own an iPhone, I do not play Angry Birds, and I despise shows like the batchelor. But please, go ahead with your idicoy.

      "iOS users are not worried about convenience, usefulness, or productivity, they are worried about owning an iPhone."

      How do YOU know what iOS users are worried about? Are you projecting your own insecurities and issue with the purchase of your device of choice? Having buyer's remorse maybe? I own an iPhone because it does what I need, when I need it, and how I need it. Android has too many bugs, WP is too busy of a UI for me, and the new BB OS is still to new and untried. So I AM concerned with usefullness, convenience, and productivity... imagine that - you fail again.

      "Apple should take a tip from this and raise the price $100."

      Why? They are making enough of a profit yes? More profit than any other smartphone OEM...
      athynz
    • Geese qwerty.....

      Bitter much?
      Deborah_D
  • Why did they expect otherwise?

    Why would small and medium businesses put up the expense to create an infrastructure for a product that is a minority player in the overall market? If this was a feature on every mobile phone, then they would be on to something. As it is, if I know that a retailer is giving some extra offers or discounts to some people with a particular device in their pocket and not to those with a competing device, I'd actually make it a point to never shop there.
    jvitous
    • Because the iPhone represents the majority profit center.

      Cheap feature phones running Android (the vast majority of Android sales) are not the same as flagship Samsung and Apple devices. The local grocery has just implemented Passbook and it is nice to remove a card from my wallet.

      They still don't have NFC capabilities.
      Bruizer