Will Apple Pay be a Mobile Payments Breakthrough?

With Apple’s Apple Pay launch, set to go live October 20, 2014, we might finally get an inkling of whether contactless mobile payments can become a relatively common form of retail payment, outside the confines of Starbucks locations.
Apple Pay offers an easy, secure and private way to pay using Touch ID on iPhone 6  and iPhone 6 Plus devices.


Apple Pay also will be enabled on  iPad Air 2 and iPad mini 3 tablets as well.


If security is an issue, Apple Pay is designed to protect the user’s personal information and overcome that objection.


Apple Pay doesn’t collect any transaction information that can be tied back to a user and payment transactions are between the user, the merchant and the user’s bank.


Apple doesn’t collect purchase history, so when a user is shopping in a store or restaurant Apple doesn’t know what a user bought, where the user bought it or how much the user paid for it.


Actual card numbers are not stored on the device, either. Instead, a unique Device Account Number is created, encrypted and stored in the Secure Element of the device.


The Device Account Number in the Secure Element is walled off from iOS and not backed up to iCloud, either.


Apple Pay supports credit and debit cards from the three major payment networks, American Express, MasterCard and Visa, issued by the top US banks.


In addition to American Express, Bank of America, Capital One Bank, Chase, Citi, Wells Fargo and others, who announced support in September, more than 500 new banks from across the country have signed on to Apple Pay.


Users can make purchases in stores and within apps, with credit cards issued by many of the leading banks nationwide, which make up 83 percent of the credit card purchase volume in the United States.


Spectrum Futures 2014

In addition to the 262 Apple retail stores in the US, availability from leading retailers at launch include: AĆ©ropostale, American Eagle Outfitters, Babies”R”Us, BJ’s Wholesale Club, Bloomingdale’s, Champs Sports, Chevron and Texaco retail stores including ExtraMile, Disney Store, Duane Reade, Footaction, Foot Locker, House of Hoops by Foot Locker, Kids Foot Locker, Lady Foot Locker, Macy’s, McDonald’s, Nike, Office Depot, Panera Bread, Petco, RadioShack, RUN by Foot Locker, SIX:02, Sports Authority, SUBWAY, Toys”R”Us, Unleashed by Petco, Walgreens, Wegmans and Whole Foods Market. In addition, many others will add support this year, such as Anthropologie, Free People, Sephora, Staples, Urban Outfitters, Walt Disney Parks and Resorts.


Apps with the ability to use Apple Pay at launch include: Apple Store app, Chairish, Fancy, Groupon, HotelTonight, Houzz, Instacart, Lyft, OpenTable, Panera Bread, Spring, Staples, Target and Uber. Many more will support Apple Pay by the end of this year with popular apps such as Airbnb, Disney Store, Eventbrite, JackThreads, Levi’s® Stadium by VenueNext, Sephora, Starbucks, StubHub, Ticketmaster and Tickets.com, among others.


As might be expected after several years of consumer exposure to the idea of contactless payments, awareness no longer is the biggest barrier. That includes both efforts to commercialize mobile payments, as well as to promote use of contactless payment cards.


A study conducted for Visa recently found that 45 percent of Internet users in France who owned a contactless bank card had already used it.


About 25 percent of respondents said they were ready to pay this way.


Contactless payment cards might allow users to complete transactions nearly twice as fast as traditional payment methods.


When asked about the main advantage of completing a transaction with such a device—an open-ended question with no prompted responses—nearly half of France’s web users mentioned contactless payments’ speediness.


No other benefit was cited by more than 15 percent of respondents.


In principle, use of a mobile phone for contactless payment is functionally equivalent to using a contactless payment card.



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