It’s official. iPhone 6 and Apple Watch users will be able to pay with a tap of their devices at more than 200,000 major retailers. The move is set to revolutionize the way that consumers pay for merchandise both in-store and online.
After weeks of speculation about whether or not Apple would finally enter the mobile payment arena, the company’s chief executive Tim Cook introduced Apple Pay during Tuesday’s media event in Cupertino, California.
“Today’s announcement marks a pivotal moment in the transition to digital payments,” says Jorn Lambert, group executive of digital convergence at Mastercard, adding that he believes Apple Pay will become mainstream very quickly.
The new digital payment feature will allow users to scan Visa, MasterCard, or American Express credit cards into their phones and then upload card information into the Passbook app. If a user wants to pay for something in-store, he or she can hold the iPhone in front of a payment reader and place their finger over the fingerprint sensor to confirm. In an app, a user chooses Apple Pay as their payment method and confirms with Touch ID on their phone. The app will then generate a one-time code instead of sharing information with the merchant. If the phone is lost or stolen, the owner can suspend payments from the app.
For the Apple Watch, credit and debit card information can be uploaded via iTunes and the device uses a mini version of Passbook to hold these details. When a consumer pays, he or she double-clicks the button beneath the “digital crown” and holds it up to the contactless payment system. Once the payment has been accepted, the watch will vibrate and make a beep.
Cook calls reliance on plastic credit cards a “fairly antiquated payment process,” adding, “We’re totally reliant on the exposed numbers, and the security codes that all of us know aren’t secure. It’s no wonder that people have dreamed of replacing these for years. But they’ve all failed.”
Merchants and consumers alike have shied from other mobile payment systems such as Google Wallet because they were inconvenient and required costly system upgrades. But Apple Pay seems to have finally gotten businesses on board.
The company has partnered with more than 200,000 companies to integrate Apple Pay into the everyday shopping experience, including Disney and McDonald’s. Apple Pay will also work with existing apps from companies like Target, Groupon, and OpenTable.
But it isn’t just the big brands who are most likely to benefit from Apple Pay. According to Lambert, smaller players too “will be able to play with the big boy”. Embedding Apple’s technology into point of sale systems is not a big task, he notes, but it enables very secure digital payments meaning customers may feel more comfortable.
Getting merchants to embrace Apple Pay is just the first hurdle toward launching a successful mobile payment system. Apple still needs to get consumers interested, which shouldn’t be difficult considering the company already supports 800 million iTunes accounts, most of which are linked to credit card information.
Plus, according to reports from the Wall Street Journal, Apple is expected to produce between 70 and 80 million combined units of the 4.7- and 5.5-inch iPhone 6 by December, so it appears the company is confident that its customer base is ready to give Apple Pay a try.
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