Banks and retailers hop on Apple Pay bandwagon
Yesterday was Apple’s big day. The tech giant introduced its new Apple iPhone and its long awaited Watch. While both of those products may be big news, what’s inside them — specifically Apple Pay — may prove to be the biggest headline of all.
In short, Apple Pay promises to give consumers a safe, convenient way to make payments, no credit cards needed. Owners of Apple’s new iPhone 6 models will not need to wake their display or open an app to make a payment. Thanks to a Near Field Communication (NFC) antenna in the device, all that is necessary is to bring the phone near a contactless reader with a finger on Touch ID.
For those worried about their sensitive data falling into the hands of thieves, Apple says it has that covered. Apple doesn’t store an individual’s credit card number or give it to stores where purchases are made.
"We create a device-only account number and we store it safely in the secure element," said Apple senior vice president Eddy Cue during yesterday’s keynote address. "Each time you pay, we use a one-time payment number along with a dynamic security code, so you no longer have the static code on the back of your plastic card."
Apple has buy-in from major banks, the top three credit card companies and retailers representing more than 220,000 stores in the U.S., including the Apple Store, Bloomingdale’s, Disney Store, Macy’s, McDonald’s, Nike, Petco, Staples, Subway, Toys "R" Us, Walgreens and Whole Foods.
"This should be a very natural extension of smartphone technology," Gil Lauria, an analyst with Wedbush Securities, told The Wall Street Journal. "Imagine walking through Macy’s and getting an offer for 15 percent off sent right to your phone and then being able to apply that just by flashing your phone at the register."
Apple Pay will also be included in apps for Groupon, Instacart, Panera Bread, Sephora, Starbucks, Target and others.
"We know mobile is becoming the front door to Target, and we’re focused on creating the best possible mobile experiences for our guests," said Jason Goldberger, senior vice president of Target.com and mobile, on the chain’s A Bullseye View website. "We’re thrilled to support Apple Pay to streamline how our guests pay in the Target app — this absolutely makes purchasing from Target’s mobile app easier than ever."
According to a recent survey conducted for CreditCards.com, 44 percent percent of respondents said they’ll never use phones to make payments while 18 percent expect to "hardly ever" use them. Apple has succeeded in getting Americans to change behaviors in the past. Will the same be true with Apple Pay?
- Apple Pay
- Can Apple Solve Riddle of Mobile Payments With Apple Pay Service? – The Wall Street Journal (sub. required)
- Apple takes NFC mainstream on iPhone 6; Apple Watch with Apple Pay – CNET
- The must-see moments from Apple’s iPhone event – CNET
- Banks, credit card companies see Apple Pay as boon for customers – MarketWatch
- Mobile Shopping is Getting Easier – a Lot Easier – with Apple Pay and the Target App – A Bullseye View
- Instacart Announces Integration with Apple Pay – Instacart
- Pay by smartphone? Consumers wary, poll says – CreditCards.com
How does Apple Pay stack up against other mobile payment options? Will Apple succeed where others have failed in changing consumer payment behavior? How much market share will Apple Pay need to be viable?