Mobile Commerce Insider Featured Article

October 20, 2014

Apple Pay Begins Today

The announcement of Apple Pay last month was seen by many as the catalyst that would catapult mobile payment solutions to the mainstream in the United States. While countries around the world readily use mobile payment solutions, the U.S. has been slow in adopting this technology. Apple’s entry into this market brings with it more than 60 million U.S. iPhone owners, a number that businesses across the country cannot ignore, which is urging them to ditch the legacy POS systems that are in place and invest in the hardware and software needed to start accepting Apple Pay and next generation payment systems.

It is important to point out Apple Pay is not using a new technology nor is it innovative. As Marc Andreessen told Bloomberg's Emily Chang on Bloomberg West last week, “It is innovative in a way that is consistent with the status quo.” That statement could be construed as an underhanded slight against Apple, but the company can take comfort knowing there are few businesses in the world that can change the ecosystem of an industry by launching a new service using existing technology.

While many payment systems have been trying in vain to bring credit card companies and banks together under one umbrella for mobile payment solutions in the U.S., it was not until the announcement of Apple Pay the vast majority of these financial institutions decided to sign on.

According to the company, the Apple Pay platform is now part of the vast majority of credit cards issued by the leading banks across the country, which make up 83 percent of the credit card purchase volume in the U.S. Since the announcement of this payment system, more than 500 new banks have signed on to Apple Pay, along with credit and debit cards from the three major payment networks, American Express, MasterCard and Visa.

Starting today Apple Pay will provide an easy to use, secure and private platform to pay using Touch ID on iPhone 6, iPhone 6 Plus, iPad Air 2, and iPad mini 3 in stores and within apps. This new solution doesn’t collect any transaction information, thus limiting the interaction between the user, the merchant and the user’s bank. Apple Pay creates a unique device account number which is encrypted and stored in the Secure Element of the device and walled off from iOS and not backed up to iCloud. Additionally, the company has also stated it doesn’t collect data on the purchases customers make such as where a particular product or service was obtained or how much was paid.

“Our team has worked incredibly hard to make Apple Pay private and secure, with the simplicity of a single touch of your finger,” said Eddy Cue, Apple’s senior vice president of Internet Software and Services.

Along with the many retailers and financial institutions that have signed on, the leading payment solution providers and terminal suppliers have also agreed to bring merchants in stores and in apps the ability to accept payments using Apple Pay. While involvement from financial institutions is critical, it is the participation of these companies that will ensure wide availability of mobile payment systems in the United States.

Apple Pay is not reinventing the wheel, but it is simplifying a technology that currently exists so it can be adopted by consumers and merchants more easily. Sometimes being innovative in a way that is consistent with the status quo, as Andreessen put it, can only be accomplished by a company with the clout to change that status quo by just participating in the sector.




Edited by Rory J. Thompson




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