The concept of mobile payments has been evangelized for a long time by information technology experts. However, its true definition is yet to be clearly experienced and previous efforts have only reassured people of the need to stick to old-fashioned credit card mag stripes.
Despite all the shortcomings of former efforts of realizing this dream, Apple now believes it has the solution with Apple Pay. This will allow consumers to buy products with a simple touch on their smartphones.
This technology is however still surrounded by various speculations and concerns. It will only be seen whether people get comfortable with the notion of mobile payments and how future enhancements will turn out.
Here are 10 things to know about Apple Pay regarding the technology, how it works, pros and cons.
1. Uses NFC Technology
The first rumor to be confirmed when Apple Pay was first announced was its use of NFC technology (near-field communication). NFC is a technology that allows electronic devices to communicate using radio frequencies. This tech has been used in applications such as Bluetooth.
Apple products users already have loyalty credits and earnings as well as credit card information stored in digital accounts. To pay for goods in the real world, conventional means require swiping of credit cards on terminal machines.
Apple Pay will only need customers to touch a confirmation button at close proximity to the payment terminals to execute transactions. This reduces time wastage characteristic of long queues waiting for their cards to be swiped on a terminal machine.
2. Integrated with Touch ID
Apple Pay will also work with touch ID technology that recognizes an individual’s fingerprint before accessing the mobile wallet features.
The latest iPhones already incorporate touch ID technology which will now work in line with the NFC to improve the security of making payment transactions in terminal points. To complete payments, users will only need to tap their phones and place their finger on the home button for Touch ID.
3. Access through Passbook
Apple decided to put their mobile payment solution within an already existing Passbook application. Apple Pay is now placed at the top position in the Passbook menu which apparently also includes access to other forms of digital payments like loyalty cards and tickets.
This however requires users to add a picture of their card to Passbook for verification. To achieve it, Apple allows uploading of card information using iPhone iSight camera.
4. Improved Security
One of the downers characterized in all previous attempts to develop functional mobile wallets was security. Apple Pay ensures the credit information is not retained in Apple’s servers or given to the merchant.
Once the card is captured and added to Passbook, the details are stored in a new chip called Secure Element available in iPhone 6. This will be combined with the dynamic code payment system to heighten security measurements.
5. One time shopping card
Unlike conventional credit cards where the same code is used over and over again until your card is replaced, the mobile codes will be dynamic and used in one-time shopping. After apple verifies your card that has been added to the Passbook, it generates a device-specific code/number. This ensures a dynamic security code and one-time payment number. This will be another security add-on that may lure users to embrace the mobile wallet technology.
6. User privacy
Recent concerns about customer discretion arose when celebrities saw their private information and pictures spread on various sites on the internet. Apple assured users that this technology does not collect, retain or track any shopping information which is good for customer privacy. This is perhaps one of the most important advantages when Apple Pay is compared to other payment options.
The inability to collect and retain user data eliminates opportunities for information theft, manipulation and fraudulent activities. Users can therefore stop worrying whether their shopping lifestyles and patterns will be exposed. The NFC technology will however be able to identify unusual patterns where purchasing is done outside the user’s usual location. This is another security pro from Apple Pay.
7. Only available for new iPhones
Since the mobile payment is produced by Apple, it is only available for Apple smartphones and other mobile devices. The technology is also new which means only the latest versions have integrated this feature.
Users with earlier versions can only wait for current contracts to expire and future upgrades that include this integration. The feature is definitely expected to appear in future smartphone releases.
8. Supported by 6 banks and 220,000 merchant terminals
At launch, Apple Pay will be supported by 6 banks in the US. An incredible 220,000 merchant locations spread across the various states will be supported.
Some of the merchants include Bloomingdales, Duane Reade, Macy’s, McDonalds, Whole Foods, Panera Bread, Disney Store, Walgreen’s, Sephora, Subway and of course, the Apple Store. Consumers will be able to add MasterCard, Visa and AmEx payment cards.
9. Only available in USA
At launch, which is expected to be somewhere in October 2014, Apple Pay will only be available for USA citizens. This is because the merchant locations are only in the US.
However, Apple has confirmed that plans and systems are currently underway to make this possibility available in other regions of the world. This will require collaboration with credit card companies from those other regions and comprehensive arrangements.
10. Complimentary rather than alternative
It is important to acknowledge the fact that Apple Pay is currently only a complimentary payment method restricted to specific merchant location and Apple devices. It is still far from being an alternative to conventional credit card and cash payment solutions. Besides, it can not be used when the mobile device or smartphone battery power runs out. Credit cards and cash will therefore still be priority payment options.
Mobile wallet has witnessed various downfalls. Nonetheless, Apple now promises to not only improve and enhance the technology, but also the customer experience.
From convenience to time efficiency and improved security measures, digital mobile wallets can only be expected to gain further prevalence. Digital transactions using this technology are set to further increase mobile transactions.