Apple’s New iPad Could Be Even More Suitable for Payments Than the Old One

The debut on Wednesday of Apple Inc.’s iPad 2 ushers in a thinner, lighter version of a tablet computer that debuted a year ago to considerable fanfare both generally and in the payments business. Like its sister product, the iPhone, the iPad won adoption by some merchants looking for ways to accept card payments while on the move. Some startup developers, such as Square Inc., even introduced payments applications for the iPad first, following up with apps for the iPhone later.

The original iPad, which Apple launched last April to some skepticism in the market, has proven to be a huge hit. Apple sold 14.8 million of the tablets through the end of the year, good for $9.5 billion in revenue.  Already, developers have introduced more than 65,000 apps for the iPad. The device’s immediate success has inspired a raft of competitors. Some 30 similar machines were on the market by year’s end, while 64 different companies have announced 102 competing models , according to PRTM, a consulting firm, and as reported by the Wall Street Journal.

Like its predecessor, the new iPad offers potential advantages for merchants and developers looking for ways to display merchandise, offer loyalty incentives, and take payment, says George Peabody, director of the emerging technologies advisory service at Mercator Advisory Group, Maynard, Mass. “What makes a tablet different from a phone is that screen real estate,” he notes. “That allows you to do more things in a richer way. Tablets are much better for loyalty or merchandising that lead up to a payment.”

The iPad 2, which Apple chief executive Steve Jobs came back from medical leave to showcase at a formal launch in San Francisco, could be even more advantageous for mobile merchants than the original iPad, which went on the market last April. The new device, which will go on sale March 11, is a sleeker machine, thinner indeed than the iPhone. It has also shed weight, dropping from 1.5 to 1.3 pounds. This should make the device easier to hold and tote around, experts say. At the same time, the new iPad carries the same price, starting at $499 for a model without a cellular-network connection. Apple also cut the price on the older version to $399.

Still, the improved device faces competition. Among the new tablets that have come on the market in the iPad’s wake is the Xoom, from Motorola Mobility Holdings. This machine, whose starting price is $600, features a dual-core chip, something Apple has built into the iPad 2.

And for all its sleekness and lighter weight, the iPad may still fall short for some payments applications, Peabody says. He notes the device may not be rugged enough, for example, for many outdoor environments. Also, it may offer more than many merchants need, particularly if all they really need to do is process card payments. “With a smart phone you get a price point that’s a lot lower, and you’re using it for everything,” he says. “If it’s about payments, a smart phone will work just fine.”

That means merchants that get an iPad will need to figure out how to exploit its big screen to build up customer interest to the point that a payment will follow, Peabody says. In displaying variations on merchandise, for example, “the tablet can be enormously helpful,” he says. With its lighter weight and thinner case, the iPad 2 could also prove useful for a technique called line-busting, or allowing customers standing in long checkout lines to pay for their goods by dealing with a clerk carrying a portable device. Peabody even sees tablets ultimately replacing kiosks if they can be “ruggedized.”

Indeed, the sudden popularity of the iPad, and the emergence of rival tablets inspired by the Apple device, has Peabody thinking “less about the iPad’s impact [on payments] and more about the tablet’s impact,” he says. But while Apple doesn’t have the tablet market to itself any more, it is likely to remain the dominant supplier for some time. It will command a 78% share in 2011, based on a worldwide market of 43.6 million machines, according to researcher eMarketer.