A number of our clients have signed up to offer Apple Pay services to their customers or are seriously considering doing so. Should you be considering Apple Pay for your customers?
Other past mobile wallet ventures – Google Wallet, for example – have enjoyed only modest success. But Apple Pay may be different. For one, Apple Pay hit the market this fall with unprecedented support from large banks, retailers, and credit card companies. It’s hard to miss the Apple Pay logo at many established retail outlets these days. Second, this is Apple, a company whose iPhones and other products consumers (including your customers) adore. While it is too early to tell whether Apple Pay will take off like many experts suggest, there can be no doubt that the Apple brand changes the game. Apple’s involvement may be the impetus that moves mainstream consumers to digital payments.
Apple Pay is available to users of the new iPhone 6 and iPhone 6 Plus. It uses near-field communication (NFC) and tokenization technology with the iPhone’s built-in fingerprint reader to provide what many believe is a more secure payment method than traditional credit cards. In a transaction using Apple Pay: i) the user opens the Apple Pay app on the iPhone to present to the merchant; ii) the iPhone connects to a payment terminal using NFC; iii) Apple Pay transmits payment information through a unique token number and a security code that is specific to that transaction; iv) the user approves the transaction through the touch identification fingerprint reader. The merchant does not receive any credit card information in an Apple Pay transaction. Because of this, and the other security features associated with Apple Pay, the service provides greater security against data breaches.
At the end of the day, consumer demand for Apple Pay will determine the degree to which the service is embraced by financial institutions and merchants who process payment transactions. If the success of the iPhone is any indication, Apple Pay could transform our payments system. Obviously, the risk for institutions that don’t offer Apple Pay is the loss of customers who migrate to institutions that do.