By Chris Dato • October 29, 2014
As you are probably aware, Apple launched its new electronic payment system about a week ago. The system, called Apple Pay, aims to eliminate the need to carry around credit cards and debit cards by allowing user to pay using their mobile device. The rollout was met with curiosity from customers, as well as a surprising amount of resistance from retailers.
Before we go any further, let’s discuss how Apple Pay works. Apple unveiled Apple Pay on October 20, 2014, alongside the most recent update of the iOS 8 operating system. The feature is only available to iPhone 6 and iPhone 6 Plus users. This is because Apple Pay makes use of near field communication, or NFC, of which only the latest model of Apple products are capable. The iPad Air 2 and iPad Mini 3 are also compatible with the new function, although their functionality is limited to in-app purchases.
Once you have installed the latest version of iOS 8, you will need to scan in your card information using the phones camera. The information is then securely stored, and your phone is ready to make purchases. To tender a transaction using your device, simply place your thumb on the touchID fingerprint scanner and point the phone toward the Apple Pay Reader. Transaction complete!
In order for this system to work, participating retailers had to retrofit their point of sale system with the Apple Pay reader. The launch included partnerships with many major retailers, making Apple Pay a payment option in over 220,000 locations. These participants include retailers such as McDonald’s, Macy’s, Chevron Gas Stations, Walgreens, and Panera Bread amongst others. In addition to these brick-and-mortar retailers, Apple has also struck a deal with some prominent apps to begin accepting Apple Pay. These businesses include Airbnb, Groupon, Lyft, and Uber, adding another level of convenience to these services to make our lives easier.
Of course, all of this simplifying raises a seemingly obvious concern: if I lose my phone, do I also lose all of my personal financial information to the next person who comes across it? Apple has of course thought of this concern, and has taken a number of measures to ensure your information remains safe. Apple Pay is supported by major payment networks such as Visa, MasterCard, American Express, and over 500 banks. In addition to requiring fingerprint verification in order to conduct a transaction, Apple Pay also uses your phones GPS to confirm that you are actually in the location where the purchase is being made. Using the Find My iPhone app, users have the ability to access their lost phone and disable the Apple Pay feature from a remote device.
You may have noticed some prominent names missing from the list of retailers who are working with Apple on their new electronic payment system. Retail industry giants like Walmart, Best Buy, 7/11, Home Depot, Lowe’s, CVS, and Rite Aid have begun disabling the NFC terminals at their checkout in order to stop people from paying with Apple Pay. These businesses are all part of a group known as the Merchant Customer Exchange, or MCX, which is currently working on a competing electronic payment system which has come to be known as CurrentC (pronounced like currency).
There are a few advantages offered by the CurrentC payment method. The most obvious of these is the 59 major companies who make up the MCX and support the new system. Like Apple Pay, CurrentC would eliminate the need to pull out your wallet at the checkout, although it does not work with major credit cards, only debit accounts and prepaid cards. This makes the system more appealing to retailers, who view it as a way to avoid the 2-3% transaction fee charged by the major credit card companies. CurrentC automatically applies relevant coupons to the transaction, and retailers would have the ability to offer exclusive discounts or loyalty rewards for using this form of payment. They would have such abilities with the CurrentC system because the retailer would have access to the customer’s personal data, which is not the case with Apple Pay, in which the information is retained by Apple. The app also provides you with a digital copy of your sales receipt.
The way that CurrentC works differs a bit from Apple Pay. With CurrentC, a QR code is generated at the point of sale and scanned in using your phones camera. In case you are not familiar, QR stands for quick response, and they are those black and white images that look like pixilated bar codes. The CurrentC app is free for iOS and android, and has a much wider range of compatibility because it is not dependent on NFC technology. However, this means that, unlike with Apple Pay, users are required to unlock their phone, open the app, scan in the QR code, and wait for the payment authorization via the cloud.
Despite the fact that the systems are not mutually exclusive, it seems clear that Apple Pay is the superior system, and will likely be the one that prevails. This speaks to the design process at Apple, which starts by examining the customer experience. They have succeeded in creating a method of payment that the customer will find easier at the point of checkout, which is where CurrentC missed the mark.
Chris Dato A Southern California kid born and raised, Chris is happiest with sunglasses on his face and sand under his back. Although a self-proclaimed master money saver, he prefers the term 'responsibly frugal' to 'cheap.'