Apple Pay:
How Mobile Wallets are Transforming Payment Transactions
With the holiday season underway, major retailers are seeing something different at their registers this year: customers looking to check out with their iPhones. Just weeks after Apple released Apple Pay on October 20th, customers are expressing an interest in the mobile wallet that hasn’t been seen before with similar mobile payment systems like Google Wallet, which debuted a couple years ago. Apple CEO Tim Cook reported that just 72 hours after the app’s release, over one million users had used it to activate credit cards. Whole Foods has already seen more than 150,000 Apple Pay transactions, and vendors like McDonalds and Walgreens are reporting significant spikes in their number of mobile wallet payments since the app’s release. Apple Pay relies on near-field communication hardware (NFC for short), a contactless payment terminal that, instead of inserting or swiping a card, involves waving or tapping it over a reader so that the devices can exchange information over a short distance. The app is not directly connected to a checking account but to a credit or debit card, charging payments to the card. To process a payment, all a user has to do is use fingerprint identification through the iPhone’s Touch ID – unlocking the phone isn’t even necessary. Because older iPhone’s lack the required NFC hardware, Apple Pay currently only works on iPhone 6 and iPhone 6 Plus. Denée Carrington, an analyst at Forrester Research, is one of many who is trying to make sense of the recent numbers that have come out about Apple Pay. “A lot of it has to do with the strength of the Apple brand and how much merchants and consumers love how easy the experience is,” he said. “I’m not saying it’s changing the landscape overnight. But this has never happened with other mobile wallets.” While Apple Pay’s initial success is capturing everyone’s attention, Google Wallet has been allowing Android users to use their smartphones as wallets for years. Until recently, however, the availability of Google Wallet was restricted to a very limited number of Android phones with NFC hardware in them. Now, any device running Android 4.4 KitKat or higher has access to the payment system. Whereas users can access Apple Pay through fingerprint identification at the terminal, Google Wallet requires two different PINs – one to unlock the phone screen and another unique PIN to access the wallet, making the latter slightly more inconvenient. While both services are currently restricted to the United States, Apple Pay seems serious about global expansion. Google Wallet on the other hand, which for over three years has been available only in the United States, has shown no indications that it plans to expand. With security issues presenting a growing concern, especially following the recent credit card breaches of major retailers like Target and Home Depot, contactless smartphone payment systems are aiming to offer users a more secure method of pay. Instead of obtaining the customer’s credit card information, the merchant receives a one-time code that authorizes the purchase. With this system in place, future hackers do not have access to users’ credit card information. Not everyone has been blown away by Apple’s latest innovation. Toys “R” Us has reported few mobile payments and attributes this lackluster performance to the lack of knowledge about this new technology. Many American retailors still do not support mobile payments, and only the newest iPhones support the NFC hardware necessary for Apple Pay. Jan Dawson, analyst from Jackdaw Research, sees the integration of Apple Pay into society as a slow one, though he does see a time in the future in which having a mobile wallet will be mainstream. “Until then, it will be something of a novelty and something that most consumers use occasionally if they use it at all. That’s still enormous progress.” While Apple Pay is still far from the dominant method of payment, the numbers are showing an unprecedented interest in abandoning cards and cash for a safer and more convenient alternative that very well could be the payment option of the future.

  • Richard

    I agree. A wise businessman in the Caribbean named Sir Kyffin Simpson always said that the key to success is progression and humility, and clearly he’s done very well for himself as a self made man!

  • John Andrews

    The Airgain IPO launches this week, and they’re a one-brand company.

    Some investors don’t think it’s a good stock though:

  • Cincinnati World Cinema

    Well said, Joe, and worth rereading on a regular basis! Another advantage of small-to-midsize city living is pace and competition. Living in NYC, LA and SF entailed a hectic pace, hallmarked by capital S striving, as one realized there were a ton of others doing what I do. Spending so much time in one’s car in SoCal meant much less time for quality pursuits and pleasures. A smaller pond with relaxed pace allows one to savor life and special moments.

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