Apple’s newest, thinner iPads made their debut this week, but the tech giant’s next move could prove to be huge when it comes to consumer-payment practices.
Apple Pay, the company’s attempt to convert iPhones into wallets for paying for goods at brick-and-mortar stores and online, goes live Monday.
Apple’s mobile-payment product works on the iPhone 6 and iPhone 6 Plus. A chip in the newest iPhones allows payments at special readers in retail outlets. It also will be available on the new iPad Air 2 for online purchases only.
But most significantly, Apple Pay has the potential of chipping away at the dominance of credit cards and current consumer-payment behavior, according to industry observers.
All shoppers have to do is reach for their iPhone. There is no need for a wallet or physical credit card, and you don’t have to wait for change from the cashier or sign a receipt.
Checkout counters in more than 220,000 stores, including Whole Foods, McDonald’s and Chevron, will be equipped with readers. Users just have to position their iPhone near one of the readers at a store, hold their finger on their Touch ID and they’re good to go.
Simplicity and Speed
The simplicity and speed of the checkout motion is made possible by the “Near Field Communication” antenna in the iPhone 6, which connects with the payment point to complete the transaction.
Apple Pay probably won’t be the biggest reason why consumers will buy new iPads and iPhones, but if they adopt the payment functionality in Apple’s devices that could be huge for the company and shopping behavior in general.
“It’s a strategic advance not just because it may be a new revenue source, but because it injects Apple into a whole different value stream” for customers and the company’s retail partners, Forrester Research analyst Frank Gillett told the Associated Press.
Apple is poised to benefit as a pioneer of mobile payments because it has widespread brand recognition and acceptance from consumers, retailers and banks.
Mobile pay certainly isn’t anything new. Tech companies and banks have been working on these systems for years.
But Apple is launching its new service at a time when consumers are losing faith in the older credit card system in the wake of massive, high-profile cyberthefts at big retailers.
U.S. merchants are facing new mandates to switch to safer chip-based cards or other payment systems.
Apple apparently has beaten everyone else to the checkout counter — as long as its mobile-payment system proves to be secure and free of flaws.