Will Apple Pay Result in Wide-Spread Adoption of Digital Money?

Apple Pay
Apple Pay

Apple’s Apple Pay™ was announced on September 9, 2014 alongside iOS 8, new iPhone models, and the Apple Watch. Will Apple succeed where others have failed? Will you no longer need to carry your wallet for your workout?

Digital payment using Near Field Communication (NFC) is not new. However, digital payments using NFC have not been widely adopted by credit card processors, consumers or retailers. It seems Apple has been able to get credit card processors and retailers on board with Apple Pay. The question now is whether Apple can get consumers to drink the Kool-Aid and use Apple Pay™. If it can, Apple will revolutionize the way consumers shop and likely make a lot of money along the way.

What is Apple Pay™?

Apple Pay is a new category of service from Apple that “will transform mobile payments with an easy, secure and private way to pay worldwide using the iPhone 6 and iPhone 6 Plus and iPhone 5, iPhone 5c and iPhone 5s (payments with iPhone 5/5c/5s require Apple Watch). Apple Pay uses a NFC antenna, a dedicated chip called the Secure Element and Touch ID.

To use Apple Pay:
  • Add your American Express, MasterCard and Visa credit or debit cards issued by most popular banks to the Apple Pay service.
  • Hold your iPhone near the contactless reader (see contactless reader icon below) with your finger on the Touch ID.
Contactless Reader Icon
Contactless Reader Icon
  • Your iPhone will vibrate and beep to let you know your transaction was successful.

Apple Pay can be used at more than 220,000 locations in the U.S. Credit and debit cards issued by Bank of America, Capital One Bank, Chase, Citi and Wells Fargo are supported by the Apple Pay service. In addition, retail stores in the U.S. will accept Apple Pay including Apple, App Store and iTunes Store (obviously), Bloomingdale’s, Disney Store and Walt Disney World Resort, Duane Reade, Macy’s McDonald’s, Sephora, Staples, Subway, Walgreens and Whole Foods Market.

Apple Pay will be available in October on iPhone 6 and iPhone 6 plus as part of the free iOS 8 update.  Apple Pay will also work in stores with iPhone 6, iPhone 6 Plus and Apple Watch. The Apple Watch will bring Apple Pay to iPhone 5/5c/5s. Developers will have access to the Apple Pay APIs in iOS 8 to incorporate into their apps.

Security and Privacy

Apple Pay will provide security and privacy by keeping your name, credit card numbers and security codes private, reducing the potential for fraud. Instead, of using your name, credit card numbers and security codes, a Unique Device Account Number is assigned, encrypted and stored in the Secure Element on your iPhone or Apple Watch.  Each transaction is authorized with a one-time unique number using your Device Account Number and a unique dynamic security code to securely validate each transaction.

Apple does not collect your purchase history so Apple will not know what you bought, where you bought it or how much you paid for it. If your iPhone or Apple Watch is lost or stolen, you can use Find My iPhone to suspend payments from that device.

Online Shopping

You can stop wasting time inputting your credit or debit card details, shipping information, and billing information into iPhone apps to purchase goods and services. You can pay for goods and services including apparel, electronics, health and beauty products, tickets and more with Touch ID. The ability to pay simply within apps using Touch ID will further cement Apple’s ability to charge developers and retailers a commission on purchases made in iOS apps. The credit and debit card details are kept private and are not shared with the online merchant, which will reduce the risk of hackers stealing credit and debit card details from online merchants since the information will not be on their servers.

Apple Pay will be released in October 2014. I look forward to using Apple’s new Apple Pay service. I believe it will usher in the future of convenient secure digital payments. Now that I no longer need to carry a wallet to the gym or on runs, I will now need a reliable device to wirelessly lock and unlock my door so I can avoid carrying a key.

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