Apple Pay — Is It the Revolutionary Retail Game Changer?


One of major recent announcements out of Apple, along with the iPhone 6 and iOS 8, was the introduction of Apple Pay, their mobile payment service. A competitor with Google Wallet, which saw its own debut last year, Pay looks to revolutionize the way we shop by providing an easy to use and hopefully more secure mobile payment experience.

Considering the high publicity of retail hacking incidents that affected Target and others, mobile payment systems promise a more secure experience for both shoppers and retailers. With Google Wallet already making inroads in the marketplace, the obvious move from Apple was to develop their own payment system.

Many retailers are already on board, promising compatibility with both Apple Pay and Google Wallet. On the other hand, a consortium of retailers are hedging their bets with support for yet another mobile payment system. Let’s try to make some sense of the changing world of mobile payments.

A Closer Look at Apple’s New Mobile Payment System

Like other mobile payment systems, Apple Pay relies on technology called Near Field Communication (NFC). NFC allows two devices in close proximity to pass data back and forth in a secure manner. In the case of mobile payment systems, the devices in question are usually a smartphone and a retailer’s pay terminal. NFC provides a much more secure environment than swiping your credit or debit card when making a purchase.

Pay works on only a subset of Apple’s devices, however. The iPhone 6 and iPhone 6 Plus both can be used for payments in brick and mortar stores. The Apple Watch, when it is released in 2015, also supports in-store mobile payments. In addition to those devices, the iPad 2 Air and iPad mini 3 support in-app online payments using Pay in concert with those devices’ Touch ID feature, so this system works for both brick and mortar as well as Internet-based retail.

Apple Pay’s setup process is a breeze. You simply enter your credit or debit card information into iOS’s Passbook, which also manages tickets, coupons, and more. You also have the option to use your Apple device’s camera to take a picture of your credit card instead of manually entering your card data.

Transaction security is enhanced by using your device’s unique account number combined with the transaction ID to process your purchase. Your credit or debit card information never gets transmitted to the merchant or stored on their servers. Take that, hackers!

This extra layer of security, combined with the physical convenience of not having to fish out your credit card and swipe it on a terminal, is a big selling point for mobile payment systems in general. If you happen to lose your Apple device or if it gets stolen, you can use the Find My iPhone service to either suspend Apple Pay on the device or even delete all stored data. This extra piece of mind should is a big selling point for the mobile payment system.

CurrentC Wants to Crush Apple Pay and Google Wallet

The Merchant Consumer Exchange (MCX) is a consortium of retailers that includes Target, Walmart, Best Buy, and others. They are developing their own mobile payment solution called CurrentC. This all came to a head recently when two MCX members — the drug store chains, CVS and Rite Aid — turned off the NCF functionality on their payment terminals to block customers from using Apple Pay.

CurrentC is still in its development stage, and isn’t expected to be widely available until sometime in 2015. Considering that many of the MCX members — especially Best Buy and Walmart — also move a large volume of Apple’s products, blocking Cupertino’s mobile payment system and thus upsetting a big supplier might not be a good long-term strategy.

The retailers prefer CurrentC because purchases are deducted directly from a customer’s bank account, bypassing credit card company’s swiping fees. Customer purchasing data is also tracked, enabling those retailers to deliver targeted ads to those customers. How this all shakes out will be a very interesting story to watch in 2015.

If you are an Apple fan looking for a more convenient and secure option for shopping both online and in stores, Apple Pay looks to be a winner. The ultimate success of the service probably depends on whether members of MCX eventually agree to allow mobile payment options other than CurrentC at their establishments.