The Apple iPhone 6 and Apple Watch will make purchasing items at checkout registers much safer because of Apple Pay’s added security. Compared to the way traditional credit cards are used at check-out registers, Apple pay does not transmit user data, only encrypted material. In the long run, it is expected that credit card and debit card transactions will become more secure for consumers – in stores as well as online – as banks and retailers embrace the the new technology.
The Apple Pay system uses Near Field Communication (NFC), which is a wireless technology that allows computer chips to transmit encrypted transaction data. NFC is still not widely used, especially in the U.S., but is expected to become more widespread in the near future. General manager for Proxama North America, Pascal Caillon, believes Apple Pay may be the push NFC needs.
“Apple’s foray into NFC is a landmark and will ignite the mobile payments market globally, but especially in the U.S. where adoption has lagged,” said Caillon, reported Internet Retailer.
Credit card industry embraces Apple Pay
The credit card industry has high hopes for Apple Pay because it is believed that consumers will rely less on cash and instead use more technology and digital banking solutions.
Apple made an announcement this week that it will support cards issued on the American Express, MasterCard and Visa networks. Of all credit card purchasing volume, 83 percent will be represented through Apple Pay, because the industry’s biggest card issuers have decided to work with the new payment technology, according to the Wall Street Journal.
To allow Apple Pay to work for them, card issuers will pay Apple small fees for each transaction processed. Credit card companies believe that they will see increased revenue because of the popularity of electronic payments, which should more than cover for the fees paid. While less money will be made on each transaction initially with Apple Pay, for credit card companies, ultimately, this should be a win-win scenario.
Most purchases are already made electronically
Card transactions account for over half of all retail purchases in the U.S. According to the Federal Reserve, however, cash still represents 66 percent of all transactions under $10 and 58 percent of transactions under $25, reported the Wall Street Journal. While Apple Pay will begin to replace a large portion of credit card transactions, it remains to be seen how the volume of cash transactions occurring everyday can be tackled by this technology. Regardless, the card industry is learning that technology companies such as Apple are valuable partners that will help them shape and transform their business in the years to come. Visa’s global head of innovation, Jim McCarthy, is welcoming Apple innovations and giving them the support they need.
“We want to allow innovators to access our network and create an environment where it’s easier for them to do business with us,” said McCarthy, according to the Wall Street Journal.
Apple announced that Apple Pay will be accepted in 220,000 retail locations across the United States. Some retailers that have already accepted Apple Pay are Disney Store, McDonald’s, Nike, Petco, Staples and Whole Foods. Currently though, the retailers that have accepted Apple Pay only represent a small percentage of all retail merchants.
The ability to pay using Apple technology will only be available in stores that have installed terminals equipped to accommodate the new technology. Some retailers have declined to install the new terminals. Wal-Mart and Best Buy presently use CurrentC, a mobile payment app launched by Merchant Customer Exchange. It remains to be seen whether their decision will affect business.
As of now, only 2 percent of smartphone users make purchases with their devices in stores said the Federal Reserve, according to Internet Retailer.
“If Apple can make paying by smartphone an easy, seamless and secure experience—and even possibly add in rewards or other incentives—I think many people will embrace mobile payments,” they noted.Back To Blog