The Implications of the Apple Pay Roll-Out

Photo Credit: Apple

What is Apple Pay?

Unless you were under a rock last month, you’re aware that Apple released new iPhones, and with them a new payment system called Apple Pay. Apple Pay allows you to store credit card information on your phone and make payments simply by pressing your thumb on the home button of your phone. One may argue, “Taking my credit card out of my wallet, swiping and signing isn’t that big of a deal, and this could only be shorter than swiping and signing by a few seconds,” and one may be right. However, those few seconds saved, multiplied over several transactions a day, multiplied over the course of years will save individuals an inordinate amount of time over the course of their lifetimes. For retailers, the benefit are even greater. Walmart recently suggested it can save $12 million a YEAR for every second it can shave off of the checkout process.

Okay, I get it. It’s faster. Why is that important?

While one could argue that using Apple Pay is only slightly more convenient than using a traditional credit card, it is undeniable that using Apple Pay is SIGNIFICANTLY more secure. While the United States was the first country to adopt widespread use of credit cards, it’s reliance upon the “swipe and sign” process has seen it fall behind in credit card security and therefore become ground zero for credit card fraud.

From Wikipedia:

[Swipe and sign] has proved reasonably effective, but has a number of security flaws, including the ability to steal a card in the post, or to learn to forge the signature on the card. More recently, technology has become available on the black market for both reading and writing the magnetic stripes, making cards easy to clone and use without the owner’s knowledge.

Fortunately, in October of 2015, the payment landscape will change. Beginning later next year, you will stop swiping your credit card. Instead, you will insert your card into a slot, just like people do in much of the rest of the world, where the machine will read a microchip, not a magnetic stripe. You’ll still be signing for the time being, but the new system also enables the use of PIN numbers, if card issuers decide to add them to their cards.

Retailers are upgrading their payment terminals to adhere to these new policies, and in the process, upgrading their terminals to accept payment solutions like Apple Pay.

I’m an Apple hater and never plan on using an iPhone. What now?

A rising tide lifts all boats, my friend. Google Wallet has been available since the fall of 2011 but hasn’t seen widespread use until now. According to Ars Technica:

NFC-based mobile payments have had a boost in recent months, possibly thanks to the launch of Apple Pay, which was announced in September. Now, a person with knowledge of the matter tells Ars that Google Wallet, which launched back in 2011 and saw tepid success in the ensuing three years, has had considerable growth in the last couple of months.

According to our source, weekly transactions have increased by 50 percent, and in the recent couple of months, new users have nearly doubled compared to the previous month.

Merchants will likely rush to support Apple Pay, but in so doing will also be supporting Google Wallet and any other NFC payment solutions that bubble up. The more people who are familiar with and use the more secure NFC payment solutions, the better.

The new iPhones are a significant advancement over previous iPhones. The new iPad is approaching desktop class capability in an incredibly thin package. The Apple Watch is an amazing feat of design and engineering, but it is likely Apple Pay will have the greatest impact on the way we live our lives.