When iOS 8.1 was released on the 20th October, the update to Apple devices came with a new mobile payment service called “Apple Pay”. This service allows US iPhone 6 and 6 Plus users the chance to pay for things in-store using only their mobile phone. This secure method of payment is a typical Apple product; not the first of its kind, but certainly one of the best. And, in typical Apple fashion, the introduction of Apple Pay has caused a stir as many of the US’s biggest retailers have turned their back on Apple Pay support. Perhaps not the smartest move by these retailers, as the early adoption of Apple Pay has been unprecedented …
Out of Pocket
So, why would the likes of Walmart, Target, Best Buy, Sears (to name just a few) want to ignore Apple Pay? Well, it’s all to do with a deal that has been struck with the Merchant Customer Exchange (MCX) whereby these outlets will use MCX’s mobile payment service exclusively. The service in question is called CurrentC and is an app which is available on both Apple and Android devices. The difference is that while it can make and receive payments and transactions, it does not work with credit cards in the way that Apple Pay does. Where Apple doesn’t store any of the users’ financial details, CurrentC stores this information on their servers and shares data such as previous payments, location and address with third party partners. Due to the fact that retailers lose between 1 to 5 percent on every credit card transaction, they are keen to avoid them altogether. We begin to see the issue when we realise CurrentC does not support credit cards, whereas Apple Pay does.
Customers at the Core
This CurrentC exclusivity in stores does not only affect Apple Pay customers but Google Wallet customers too. Some people are so angry that their respective mobile payment systems are being given the cold shoulder that many are shunning CurrentC stores. It’s fascinating that this stance by the large retailers has united Apple and Android fans, many of whom are joining forces to boycott CurrentC-only outlets. Many are predicting that CurrentC will fail to keep its hold on the market as the focus isn’t on customers; they have businesses and corporations as a focus as they aim to eradicate credit card fees from transactions. Apple and Google’s respective services allow freedom of payment method and have users’ privacy in mind. The fact that CurrentC collects big data also leaves them vulnerable for security issues, as demonstrated by the fact that they were hacked very recently. This just goes to show that some people aren’t too keen on how they operate…
Quick and Easy
Most new smartphones come with NFC (Near Field Communication) built in, which is a low power, quick and efficient way to send and receive data, most notably in contactless payment. CurrentC is still using QR codes for transactions which is considerably slower and clunkier than the alternative. Apple’s iPad Air 2 has NFC built in, however is not currently being used. We could see this feature being activated further down the line in order to integrate with other Apple products. Think portable iPad tills receiving one tap transactions from customers’ iPhones.
Contactless on the Rise
Apple could receive 0.15% of transactions made using Apple Pay, which means that every time you pay for goods or services using Apple Pay, Apple is directly profiting financially as a result. To put into perspective just how lucrative this could be, let’s look at the adoption rate of contactless payment. In June 2014, approximately £158.5 million was spent in the UK alone! This is quite astonishing when you think that contactless payment is far from a mainstream payment method. Once Apple put their weight behind it, who knows how high this figure will be (considering 1 million cards were activated on Apple Pay in the first 3 days). Factor in Apple’s 0.15% cut on transactions and you can see how much money this will generate for the technology giants.
Apple is one of the biggest and most powerful “tech” companies in the world, but if Apple Pay becomes a success we may see them broaden their horizons beyond technology, computing and electronics. It could be a matter of time before they have their own credit cards (physical or digital) and perhaps even their own bank!
In 5 or 10 years’ time we could be reminiscing when Apple used be a company that just made mobile phones…