With the release of the much-anticipated
iPhone 6 and iPhone 6 Plus, Apple also released what they call ApplePay. Much like Google Wallet that was introduced
several years ago, ApplePay works by loading your credit or debit cards onto
the device via an application. From
there a user may go to any participating retailer to purchase a product with
their new ApplePay account. The user only needs to hold their phone over the
receiver and via the device’s NFC chip it will transmit a signal to the
retailer’s system. The question of
security comes into consideration as the Apple’s iCloud was recently hacked and
private celebrity photos were distributed to the masses. Apple’s security is actually quite elaborate,
the company will never know the user’s credit card number and with every
transaction a special code is generated for a one-time use. Thus making ApplePay, at least on paper, safer
than the credit cards already in your wallet or purse.
ApplePay will streamline the
shopping experience and allow the user to carry much less and in some cases the
user will no longer need a wallet all together as many people already do not
carry cash on them. The move to
electronic payment has slowly begun to take over more of the retail
market. With convenience such as this,
the consumer will more easily be able to make purchases on a daily basis
without the need to carry hard currency.
Apple’s addition to the marketplace
might just be the way of the future however time will tell whether they are
able to effectively implement this payment method into stores around the United
States and on a global scale. The retailer Best Buy has claimed that they
will not purchase the new receivers that are equipped to accept the Apple
device’s NFC transmission due to cost. For
years companies have used credit card transactions to track and apply that data
to future projects. This data has become
incredibly valuable to the retailer and without it many retailers would have to
change how they market to the customer.
Companies such as Wal-Mart and Target have both claimed that they will
not support the ApplePay software in the short run, however I believe that they
will make the switch eventually as to not lose out on a significant market share.
Since the user will be using their phone more
in retail locations, retailers should begin to put a larger effort into developing
their mobile applications in order to collect data about their customers. Retailers would be able to provide the
specific user with coupons and deals that have been curtailed to their recent
purchases as they enter the store location.
With Apple leading the way in the digital marketplace many retailers
must follow suit to not fall behind and still provide the consumer with the
most convenient shopping experience. As
technology becomes more crucial in the overall shopping experience, retailers
must make the decision whether they would rather lose customers or make the switch to NFC receivers.
Here is a short video on how ApplePay works:
Article:
http://money.cnn.com/2014/11/05/technology/security/apple-pay-love/index.html
http://money.cnn.com/2014/11/05/technology/security/apple-pay-love/index.html
3 comments:
Earlier this year when Apple was in the process of releasing the iPhone 6 I began to look into what other products they may be coupling with this launch. I found ApplePay to be very interesting, in that it could have a massive effect on the growing mobile payment industry. Since Apple is already a globally known brand that only continues to grow I have to agree with Pat when he said that they are leading the way in the digital marketplace. However even with Apple’s heavy investment into their mobile payment platform, promising to work with over 200,000 retailers nation-wide, I do believe there is a downside for the company and possibly investors.
It may not be at the forefront of investor’s minds at the moment, given all the recent and upcoming product releases, but with the introduction of ApplePay, there is the possibility that Apple could be considered a financial service provider which would make them subject to regulation by the Consumer Financial Protection Board (CFPB). The CFPB has regulative authority over 2 classes of people covered persons and service providers. By definition a service provider must provide “a material service to a covered person in connection with the offering or provision by such covered person of a consumer financial product or service.” As of now Apple has not been formally classified under one of these 2 titles, however Moira Vahey, a spokeswoman for the CFPB, recently stated “Rules that apply to plastic card payments also apply to payments with a phone,” and continued on to say “…the CFPB will continue to closely monitor developments in the mobile payments space, so that we can identify any emerging consumer protection issues.”
Over this past summer the CFPB has begun to ramp up its investigation into the broader mobile financial services industry, and with Apple’s most recent iCloud hacking scandal there is sure to be heavy regulatory concerns surrounding ApplePay. However since ApplePay is designed not to be involved in the active “flow of funds” many concerns over possible regulations can be eliminated, leaving privacy & security as the major issue. With the recent iCloud hacks still on mind consumer’s minds Apple has made it a point to counter the concerns surrounding its security siting multiple different ways in which users will be protected. For example if your one’s phone is lost or stolen, the find my iPhone app can be used to quickly suspend payments.
Currently the CFPB, along with other government regulators, has made no definitive move to regulate Apple or ApplePay. It seems that there are still a lot of details to be worked out by regulators before they can decide if actions need to be taken. However one thing is for sure, ApplePay along with other mobile payment platforms do see to be the way of the future, and, as Pat said, Apple looks like a strong candidate to be at the forefront of mass consumer adoption.
When I first heard about the idea that Apple was a bit skeptical as to how they were going to effectively incorporate this strategy to current Apple customers and try to gain new customers. I felt as though if you were to load your credit card or debit card onto the device through an application then there was a large chance that fraud could be committed. However the explanation that Apple’s security is actually quite elaborate, the company will never know the user’s credit card number and with every transaction a special code is generated for a one-time use. Thus making ApplePay, at least on paper, safer than the credit cards already in your wallet or purse. This made sense to me because it is clear that the move to electronic payment has begun to take over the retail market. I think that this will eventually make the idea of paper money irrelevant. The only problem which I see is that many retail companies such as Target and Wall-Mart do not want to support the ApplePay software because they woud have to completely change the way in which they target their customers. I can see the absence of paper money coming into existence at some point but I cannot see it happening for at least another twenty or so years. But since the user will be using their phone in more retail locationsretailers should begin to put a larger effort into developing their mobile applications in order to collect data about their customers. I do admit that it is the easiest transaction I have seen and it is something that Apple users are going to use more and more because of convenience.
While I do believe that we will move away from having plastic debit and credit cards, I am not sure if Apple Pay will be the solution. I have had an NFC chip in my credit card and I only think that I have tapped my card to pay instead swiping my card once or twice. I did not find it that much more convenient and I also like to verify my total. One change that I can see to our typical shopping method catching on is RFID checkout. If we could just walk through a scanner and have all our items automatically rung up for us I think many people would use it. If Apple could partner with a company looking at RFID checkout and make it that you walk through the scanner and it charges your Apple Pay then I can see that being very popular. Like the other commenters said, the biggest issue for any new payment method is making sure that customers feel a sense of security. While Apple Pay is more secure than traditional credit and debit card, I think many consumers are still wary about technology. If Apple can convince enough consumers that it is safer than traditional credit cards then I think it has a chance of being successful.
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