Gavin Arrowsmith, Technical Consultant at Apadmi, discusses Apple Pay and the future of NCF payment:
Apple Pay is a major play by the corporation to dominate mobile payments and mobile commerce. The move will have Paypal and other services worried, despite what their PR teams are currently saying in their media statements.
Paypal is apparently not too worried; it thinks Apple Pay faces huge challenges and the launch of Apple Pay was ‘expected’. The reality is that there is a major new challenger to other payment companies and it could just be the tipping point.
Apple Pay is backed by the top three credit card companies but adoption is expected to be slow as it is likely to be four years until 100% of Apple users have an NFC enabled iPhone.
With the accompanying Apple Watch, which means payments can be made directly by scanning the wrist and not having to take a wallet or phone out of the pocket, Apple has developed an incredibly convenient way to pay.
Until now NFC payment systems have required a secure element on the user’s SIM card. This has meant that operators had to be involved in any payment system by providing special SIM cards.
Apple has eliminated the need for any direct involvement by third parties (including banks) by embedding the secure element in the phone and allowing payments to be processed through your iTunes account.
This allows any bank or credit card registered to your iTunes account to be charged even if the issuer doesn’t support contactless payments.
This will mean anybody with an iPhone 6 or Apple Watch and an iTunes account will now be able to make NFC payments and with security provided by TouchID, the fears typically associated with contactless payment technology should be largely alleviated.
As NFC payment terminals become more and more common this transaction method will likely become the norm and more businesses will adopt this method. It will revolutionise the way customers pay, making it quicker, easier and more secure.
It seems Apple has made the move at exactly the right time and will likely push this technology into the mainstream.
Expect to see competing offerings from Google and Paypal, who have similar digital payment backends to iTunes, very soon. Also rolled out at the same time is a development to TouchID that is big news for app developers like us at Apadmi.
TouchID was available on the iPhone 5s to authorise payments via the App store but now developers can use TouchID for payments within their own apps. This will make in-app payments easier and more secure which should increase conversion rates.
Even by conservative estimates Apple will be generating considerable revenue seeing that some reports have shown that in app purchases account for 76% of all purchases via the app store. We also expect to see increased demand from retailers and any type of business that trades online.
All the major tech and financial analysts have responded warmly to the Apple Pay offering and the Apple share price has risen considerably after the announcement.
While Apple Pay and in-app payments might take a few years to take off, the chances are that in four years’ time Apple Pay could be a considerable success story, and maybe it becomes the most notable offering under Tim Cook, Apple’s CEO.