Why Apple Pay Will Impact the Payments Industry

As innovative and mind-blowing as the latest Apple announcements might sound to consumers, with Apple Pay, the company hasn’t brought something to the market that we haven’t seen before. Virtual wallets have been in existence, taking advantage of NFC (Near Field Communications) technologies, for a while. Companies such as Walmart and Best Buy even modernized their POS to accept NFC/EMV payments and later regretted the investment for the low usage and the high maintenance costs.
We wondered about this for some time: Why not include EMV and NFC technologies to gadgets? At the time iPhone 4s was released there were already a number of competitors offering similar connectivity options, and it was a must when the iPhone 5, 5c and 5s were launched. Pushing its “strategy” to the limit, Apple decided not to release a terminal with NFC until recently with the iPhone 6 and 6+.
So, why is everyone out there so excited about something that has been in the market for a while? Plain and simple, because Apple is Apple, and that their users literally drive the use of these technologies.  Apps developers and gadget manufacturers are well aware that they must launch on the Apple platforms if they really want to succeed (with a few exceptions, of course). Companies like McDonalds, Walgreens, Staples and Disney know it and have announced that they will start accepting Apple Pay soon.
Why now? We’re not sure of the exact reasons but this will tremendously accelerate the adoption of both EMV and NFC technologies, and while it’s true that contactless payments has been available for years, the level of adoption is quite poor, specifically in the payment industry.
Of course, this is great news for users and for a great number of industry players that will see their business boost beyond their expectations — POS, vending machines, parking meters, the applications are almost infinite. The user experience will be forever changed when it comes to checkout and payment.
On the other hand, the adoption of Apple Pay (EMV and NFC), while considered  ”secure” and supported by cryptographic algorithms, will come together with new scam schemes, security breaches and resulting data losses. That’s not to say that virtual wallets are less secure than traditional payment cards, but it’s a matter of fact that the payment industry, ATMs operators, banks, retailers, and end users are well trained and prepared to prevent and detect well-known fraud attempts.
In summary,
The Pros: Apple Pay brings plenty of opportunities for many. It’s destined to be a change maker in the payment industry, living in harmony with credit cards (at least for now), not to replace them.
The Cons: Mobile security is frequently questioned by experts in a variety of fields. That’s why alternatives as the Blackphone are so successful. Apple Pay opens the door to new forms of data robbery, identity theft, and other scams to come.

No Comments
  • Freddy
    Posted at 16:34, 04/10/2014

    I am not agree, just because apple is apple is not enough to make an impact in the payment industry, as they did with other industries.
    My eperience working with multple EMV implemantations tells me that the efforts in NFC and mobile payments are going in the wrong direction.
    While multiple merchants are just starting to enable NFC, there are no enogh places to use NFC cards or phones. Why am I going to invest in something that I can’t use today? Maybe never?
    Sorry, we need to change the strategy,

  • admin
    Posted at 09:27, 08/10/2014

    Hi Freddy,
    We do appreciate your comments and also agree with the fact that the efforts in the NFC payment space haven’t been successful in the last years. There has been a lack of acceptance from the merchant’s perspective and most users weren’t even aware of it’s existence.
    All the past efforts haven’t been organized or effective, a lot of small players trying to figure out the best approach and trying to make their solutions an industry standard. As you know, none of them has been really successful so far (there have been some remarkable local success stories though). When we said that “Apple is Apple” we mean that now there is one big player, if not the biggest, with a huge customer base that is known to follow the company’s premises in many ways. It’s not a secret that few companies in history had change the user-behavior the way Apple has done.
    During the first 3 days after of Apple’s iPhone 6 release more than 10 Million units where sold. Unofficial sources point to over 20Million units sold as we speak. That means over 20 Million users willing to test every capability of their new phone, what includes Apple Pay, the center of our discussion. But we should not only look to those 20 Million users (Apple’s foresees sales around 70-80 Millions), right after the Apple’s event, the media coverage was overwhelming, in a few minutes NFC and contact-less payments went from a relatively unknown technology to the front page of millions of sites and newspapers, basically almost everyone connected to the internet got access to some sort of information regarding the new Apple Pay.
    Now that users has “discovered” the technology, the merchants will follow. In fact there had were some announcements in that sense the very same day of Apple’s event.
    We are not sure if Apple Pay will change the payment industry forever, but we are sure that in one day Apple did more for the NFC industry than most of the other players together in the las years.
    We really like to keep this conversation active and hear your thoughts as well as anyone’s interested in this topic. The more we discuss, the more we learn.
    Once again thank you for your collaboration and follow our posts.
    Sebastian Munoz

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