Thoughts on Apple Pay

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Apple Pay is a revolutionary payment system. I have used it a couple of times since it has launched and just love the way it has been implemented. It works just as it was shown in the keynote. You basically bring your iPhone close to the payment terminal which is waiting for payment and your cards stored in the passbook will automagically appear on your screen. If you have your finger already on the Touch ID, it would just go ahead and authorize the payment with your default card. The little chime and a subtle vibration in addition to the short animation on the screen let you know that the payment was authorized.

More and more banks and financial institution have been joining the Apple Pay bandwagon since its launch. Its like the next big thing (pun intended). And Apple’s master plan of letting banks promote the technology is working out well. We see more ads from banks for this thing than we see from Apple. Why? Because its super secure. And all banks want a payment system which is super secure. It will massively cut down on their fraud detection budget. I was impressed to see that every bank has a dedicated Apple Pay helpline to help customers activate their cards over Apple Pay. People say that Apple should have added NFC to previous iPhone versions as well. But if you think about it, they launched the iPhone 5S with just the Touch ID sensor in order to test its usability and gather usage patterns and data. They perfected the key piece of the puzzle before getting into the game.

But Apple Pay is the beginning of what the NFC technology in the iPhone can do. It is going to be the poster boy of what Apple is going to do with NFC, but there are several other awesome things that can be done. Imagine checking into your hotel room from an app on your phone and getting the NFC based soft key delivered to your phone. With contactless locks, you can directly head to your room and open it by just bringing your phone close to the lock. NFC also has massive potential to replace regular cards. Think transit passes and starbucks gift cards. All of these can be stored on your iPhone and used with next gen hardware. And since everything is authorized by your fingerprint, its super secure. And you can certainly rely on Apple to deliver the simplest implementation possible. The mere ability of the phone to wake up and spring up your cards when its brought closer to the payment terminal is the epitome of intuitiveness.

The potential is huge and I am sure a dedicated team of creative + engineering is right now working at Cupertino to design protocols and workflows to make that a reality. This is why Apple is succeeding where other have failed. Apple not only delivered the technology, they also designed a very efficient and secure way to make it work. The Apple Pay system is being praised by various security firms as one of the most secure payment systems yet. If Apple can design systems with the same level of security, efficiency & ease of use for other NFC potentials, the impact is going to be huge.

There are few glitches of course. Like with any new technology, adoption is one of the biggest challenges Apple Pay is facing. And I am not talking about consumer adoption. Apple is covered there. There are enough people in the world now to buy whatever Apple makes and make it a successful product. The real challenge is making merchants to invest in new equipments which support the payment system. Most merchants in the developed countries have the contactless payment enabled terminals installed. But there is still a big chunk of small to medium scale merchants which use the old swipe terminals and will not upgrade unless there is a new regulation in place or they see some irresistible deal which makes the investment worth. I am talking about those neighborhood stores which do not belong to a big chain. These are individually/family owned businesses which form a big part of our daily transactions. Apple is relying on the banks to do this job as well.

Apple Pay is being advertised as a replacement for your wallet. Well, you don’t only keep your money (paper or plastic) in your wallet. There are 10 other things. Granted that those membership cards can be added to Passbook in future and, well, what better place to keep your kids’ photos than an album on your iPhone? But still, think about payment transactions in places like restaurants & gas stations. Not all restaurants have those fancy wireless payment terminals which the waiters can carry to your desk (although they are becoming increasingly popular in countries where EMV chip based cards are mandated). Also, mobile phones are generally not encouraged to be used at gas stations as the batteries can ignite the fumes coming out of gasoline. And what about those quarters you keep to pay for street parking? Not all cities have meters with card readers, much less contactless card readers.

But even with all these hiccups, Apple Pay is going to succeed and is here to stay. Even if Apple does not come up with any of the other NFC based use cases, it is still a super awesome contactless payment system which will give you a short adrenaline kick every time you use it. And that’s what we live for, right?

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