I don’t know about you but I seldom carry cash anymore. It seems like the only time I really use it is for the occasional parking meter and highway toll. Credit cards and debit cards are accepted just about everywhere and they are much more convenient than fumbling around for dollars and cents. However, the massive credit card breaches at both Target and Home Depot in the past year have reminded us all of the problems with using plastic; cards get lost, stolen, and hacked.
Payment systems have been ripe for disruption for years. Credit cards are an old technology, which first emerged in the 1950s, and debit cards aren’t far behind. The rise of mobile and cloud technologies in more recent times has led to breakthroughs in new methods of payments. One of the most popular varieties of mobile payment systems is NFC, or Near Field Communications. This is a short-range wireless communications that allows two devices placed within a few centimeters of each other to exchange data. NFC enabled technology is used mostly for purchases in physical stores or in transportation services. For example, tapping your bus or subway commuter card on the reader module every morning is an example of NFC, as is using your mobile device to “tap and pay” at your favorite restaurant. Because of the complexity of NFC and extra built-in security layers, including some form of user authentication in most cases, hacking or intercepting these payment transactions would be very difficult.
Innovations in mobile payments have grown steadily in recent years. Google Wallet was introduced back in May 2011 as “an easier way to pay” that uses NFC to make secure payments on any PayPass enabled checkout. Other players have entered the mobile payment market, such as PayPal, Square, and Dwolla. But as one commentator has straightforwardly offered, “Unfortunately, these mobile payment tools have mostly been clunky, funky and junky. They’re a hassle to set up and a huge hassle to use.” Another reviewer applies this less than glowing report to Google Wallet: “it’s not as good an experience. You have to wake the phone, unlock it, hold it near the reader, and then tap in a security code. It’s slower than just swiping a credit card.”
Which all serves to bring us to the real topic for discussion . . . Apple Pay. This is Apple’s new integrated mobile and digital wallet service, introduced last month, which allows Apple mobile devices to make payments at retail and online checkouts. The way it works is amazingly simple. Just imagine that a cashier has rung up your purchase. Instead of pulling out and swiping a credit card, you simply hold your iPhone near the card reader with your thumb resting on the home button and immediately it makes the purchase using the credit card you have on file with Apple. One reviewer describes this as a simple exercise done in less than 2 seconds: “The phone wakes, beeps, vibrates, and shows a picture of your credit card (minus the number). That means you’re done. You’ve paid. You can leave.”
Security is dramatically improved because with Apple Pay the merchant never sees, receives, or stores a credit card. The way it works is that the iPhone transmits a temporary, one-time, encoded number which incorporates verification codes that only the card issuer can translate and verify. So the merchant never gets the card information, and this eliminates the chances of a thief or hacker stealing your private information.
The other factor that makes Apple Pay extra-secure is the breakthrough Touch ID fingerprint identify sensor used in the iPhone 6. The user touches the sensor while making a purchase, adding another layer of impossible-to-replicate-security – your fingerprint
Ever since Apple announced its much anticipated Watch in September, the Cupertino, California-based tech giant has received lots of renewed attention around what it does best . . . innovation! It’s all about the user experience, and this obsession is why Apple succeeds where others fail. User experience is the core principle of why people flock to buy Apple products. They buy them because they can’t do otherwise. The MacIntosh, iPod, and iPhone each revolutionized the way people interacted with technology through the mouse, through the click-wheel, and through multi-touch. But all of this started with a really cool and innovative design concept that met people’s needs.
Which is why, based on historical precedence, Apple Pay is going to be great! As Apple CEO Tim Cook declares, “Apple Pay will forever change the way we pay for things.” Quick, easy, and secure are hallmarks of the Apple experience, and these are the qualities that will disrupt the world of retail payments in 2015.