When it comes to buying items or services, there are now a number of different ways to pay for things, apart from just handing over a handful of coins or a bank note. And with the launch of Apple Pay, the list of payment choices for consumers has been widened even further. Nick Black, co-founder and CEO at the UK’s leading mobile app developer Apadmi, investigates how the new technology works and discusses whether it has the power to revolutionise the payment process.
Unsurprisingly, the launch of Apple Pay was hotly anticipated, and across the UK more than 250,000 shops are now accepting this form of transaction. The technology is available to use on an iPhone 6, iPhone 6 Plus or Apple Watch and allows users to make quick contactless payments with their device. It works by embedding a near-field communication (NFC) chip in the phone or watch, which can then be detected when the device is held against a card reader. The Apple Pay app will open up automatically and the payment verified by touching the biometric sensor in the home button on the phone or by double clicking the side button on the watch.
How will Apple Pay change how consumers buy things?
For decades, businesses have been allowing customers to pay for purchases by inserting their card into a chip and pin device, reducing the need to carry around wallets full of cash. Then to simplify the process further, contactless card payments have been introduced so customers no longer have to enter their pin code and can quickly hold their card over the machine to make a payment.
Card payments have become a popular method of purchasing goods and services and as research by Barclays shows, one in six customers would choose to shop elsewhere if they could not pay with a card. But could this be set to change with the launch of Apple Pay? All of those credit cards can quickly be added and digitally stored in the Passbook app, so they are ready to use anytime you need to make a payment with Apple Pay. Users can simply add the card that is already associated with their iTunes account, and new cards can also be registered in a few straightforward steps. Then it just takes one simple touch of the device and the transaction is complete – this means the end to counting out change or having to remember the pin code to the credit or debit card.
Are there any limitations?
When new technology enters the market, it’s usually not without its issues or teething problems. One of the main drawbacks that would prevent Apple Pay from completely replacing the wallet is the fact that payments are limited to £20 per transaction. Although this is for security benefits, it does rule it out as a method of payment when buying things that go over this limit. And currently, not all stores are accepting Apple Pay – another reason why consumers can’t just rely on it to make purchases. To allow customers to use Apple Pay, shops are required to have the specialised NFC reader, and considering that some places like bars don’t yet accept card payments, it’s likely to be some time before everywhere has one of the readers. Once businesses are aware of the benefits and see how it will improve the customer service experience, such as by making it quicker and easier to complete transactions, adoption is likely to increase.
Is Apple Pay secure?
Fraud and cyber crime is a real threat and people are becoming more aware that they need to protect themselves against such attacks – particularly when it comes to sharing personal information digitally and online. Having said this, we use the contactless capability of our credit and debit cards without thinking too much about how the data will be stored. Apple Pay does not store card details on the app or even on the Apple servers and actually offers a more secure way of paying than contactless cards. A unique Device Account Number is generated and encrypted for each new card. This is then added to a certified chip within the device called the Secure Element, which stores all of the payment information safely. Even if the device is lost or stolen, Apple Pay can be remotely suspended or wiped using Find My iPhone.
What improvements are needed?
Perhaps the most obvious way to develop the payment service would be to increase the £20 limit so it can be used for larger payments. This then leads on to the need for greater attention on how secure the app is to encourage people to trust the technology and be reassured that their bank details are safe. If people don’t feel that their data is protected then they are unlikely to make big purchases with it anyway. It would also be extremely useful if developers looked into ways to make the device’s battery life last longer. It would be highly inconvenient if you go out with just your iPhone and no wallet and the battery runs out.
While the technology is still in its early stages, widespread adoption has some way to go. For starters, people need to feel comfortable when using the technology and this will only be achieved by proving that it is a secure method of payment. To actually change the payment habits of the everyday consumer, there needs to be a greater emphasis on how Apple Pay can enhance the purchasing process and it will take time for people to get to grips with how the technology works. There are a lot of people still trying to get their heads around contactless cards, let alone payment via their phone. Early adopters are likely to be those who are enthusiastic about new technology and perhaps the younger generation.
And what about those people who don’t currently own the latest models of Apple’s products? Apple Pay is just limited to the iPhone 6 and 6S and the Apple Watch so those who have not yet upgraded to the newest versions won’t be able to use it. However, NFC payments open up the potential of changing the way we complete transactions, and with the Apple brand as the driving force behind Apple Pay, it will be interesting to see how people engage with the new technology. This is an exciting opportunity to really revolutionise the way consumers can make purchases, and retailers and businesses need to get on board at the earliest opportunity so that they can take advantage. By getting involved now, they can be ahead of their competitors and will be ready and prepared for when Apple Pay enters into the mainstream.