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Mobile Applications

What does the future look like for Apple Pay?

This is a contributed piece by Matthew Hunt, CEO at Apadmi Enterprise, the enterprise app development division of the UK’s leading mobile app developer

Apple Pay allows those with an iPhone 6, iPhone 6 Plus or the Apple Watch to make contactless payments with their device by holding it near a card reader. Each device is embedded with a near-field communication (NFC) chip and when this is detected by the card reader, it will automatically open the Apple Pay app. By touching the finger print sensor in the home button, this will verify the payment and the device will vibrate to confirm that it has been accepted.

Why all the fuss about Apple Pay?

The launch of Apple Pay in the UK has been hotly anticipated as a revolutionary method of purchasing. The aim of the mobile payment system is to eventually eliminate the need to carry around a wallet full of credit or debit cards, as users can digitally register their cards to the Passbook app. Then in one simple action, users can complete transactions quickly and easily in stores – and it can also be used to make single touch purchases within apps. As a consumer, the system is easy to use and the initial setup is quick and simple. Users can add the card that is already associated with their iTunes account, and new cards can also be registered in a few straightforward steps.

Perhaps one of the biggest benefits of Apple Pay is the fact that it offers a more secure method of payment and I think that this will be the main selling point for the technology. It is a worry for most people when it comes to entering bank details into digital systems, with the threat of cyber-attacks and identity fraud remaining a serious concern in our digitally evolving society. With contactless card payments, we hand over our credit card details freely, usually with little thought as to how that information will be stored. With Apple Pay, on the other hand, the user’s card details are not stored on the device or on the Apple servers. Instead, when a card is added a unique Device Account Number is generated and encrypted. This number cannot be decrypted by Apple, instead it is added to a certified chip within the device called the Secure Element. The chip is designed to store all of the payment information safely and the Device Account Number is unique to the device and to each added credit or debit card. Even if the device is lost or stolen, Apple Pay can be remotely suspended or wiped using Find My iPhone.

How will the technology evolve?

As the technology has only just been launched, there are however a few drawbacks for consumers. For starters, there is the fact that payments are limited to £20 ($31) per transaction just like when using a contactless card, albeit a security benefit. Also, there are only a select number of stores that support this kind of payment at the moment. It’s unlikely that a consumer would be able to leave their house without their wallet and still be able to make all of their required purchases just using Apple Pay currently. Some stores do not have the specialised NFC card reader and it is also the case that some places, such as bars, still do not even accept card payments. At this stage, while the system is still in its infancy, it’s likely that the majority of users will be digital natives and those who are fanatical about new technology.

This will change over time though as additional businesses get on board and further opportunities will become available to pay for goods via the service. Apple is an extremely powerful brand and in the past it has been able to push new technologies into the mainstream. Take the iPod for example. Before this device was launched, there were MP3 players already available on the market, but it wasn’t until Apple launched its version of the product that sales for portable media devices really took off. More businesses will be interested in adopting the technology when they see how it can improve the customer service experience such as by making it quicker and easier to complete transactions. Businesses utilising tech for tech’s sake is always a bad idea, and so Apple Pay will need to show that it can enhance the purchasing process and is a secure method of payment.

In the short term, adoption will occur when people change their habits and have confidence in the technology and the security that it offers. There are a lot of people still trying to get their heads around contactless cards, let alone payment via their phone. The technology that allows people to complete transactions via a mobile device has been slowly evolving and is yet to earn the trust of the public. In recent years there have been a few changes to the traditional ways of paying – including the launch of PayPal, money transfer technology such as Pingit and now Apple Pay. In my opinion, the underlying challenge they all have had is getting users to understand and trust the technology and getting businesses to adopt it.

What needs to change to promote adoption?

For me, if Apple Pay is to become a replacement for the traditional methods of payment – such as cash and credit or debit cards – then there is still some work that needs to be done. This includes greater emphasis on the security benefits to get people to trust the software; solutions need to be looked into to solve the battery problem on phones allowing for longer battery life; technology should be developed so that phones charge quicker and bars and restaurants, for example, could provide charging points; and the £20 transaction limit needs to be increased to allow for larger spend amounts.

It is going to take time, perhaps a few years, before we see general adoption and the adoption will likely be pushed by the younger generation who are keen to embrace new technology. At present, it is just large retailers that are offering the service but it may be the case that some smaller companies are keen to offer it to be seen to be embracing digital and in order to keep up with the larger competitors. However, I expect that many will want to hold off to see whether Apple can persuade consumers to start using it on a large scale and until they are clear on the benefits it will provide to their customers. It is exciting to explore how technology such as this can transform the way we carry out traditional practices. In this instance, with the Apple brand as the driving force, there is a lot of potential for NFC payments to become a mainstream method of completing transactions.

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