Apple said, Let there be ear buds. And we all bought iPods.
Apple said, Let there be portable computers. And we all bought iPhones.
Apple says, Let there be no more wallets. And we all say, huh?
All right, so not everyone is on the Apple bandwagon, but it does seem that when Apple says “jump,” many of us reply with “how high?” Apple has changed music, changed phones, and now it wants to change how we pay for everything.
Money Talks News finance expert Stacy Johnson explains in the video below.
Apple Pay is coming to a phone near you
The next big thing in virtual payments comes in conjunction with the launch of the iPhone 6. Dubbed Apple Pay (why no iPay, Apple?), the feature is a virtual wallet promising to be the one to get everyone on board with the idea of needing your phone, and only your phone, wherever you go.
Despite all the hype, Apple certainly isn’t the first company to launch a mobile wallet. Like its predecessors, Apple Pay uses near-field communication to allow a phone to transmit payment information to a merchant terminal. It’s a bit like how the tap-and-go credit cards work, except you’ll be using your phone rather than a card.
What the new system does have that other mobile wallets don’t is improved security and, of course, the Apple name.
Beefed up security hoped to thwart hackers
Apple Pay may be a more secure mobile wallet for two reasons.
First is that the iPhone scans your fingerprint before processing a payment. If it’s not you holding the phone, the payment doesn’t go through.
The second reason is the system by which Apple Pay transmits payment information to a merchant. Rather than sending your account information directly, the system sets up a device account number that is stored on a dedicated chip in your phone rather than on the Apple servers. To process a payment, Apple Pay uses this device account number along with a one-time-use security code so merchants don’t have access to your actual card numbers.
Then, when some hacker accesses the terminals at Target or Home Depot or wherever the next big breach occurs, they’ll get useless numbers rather than your credit card data.
But will it replace wallets?
While Apple Pay sounds promising, will it really be a game changer?
The biggest hurdle may not be getting shoppers to use the system but rather ensuring shoppers can find retailers set up to accept the payments. Apple CEO Tim Cook says 220,000 stores are ready to work with Apple Pay today, including such big names as McDonald’s, Subway and Walgreens. However, Money magazine points out that participating stores represent only 2.4 percent of the nation’s merchants. Consumers will be out of luck trying to use Apple Pay at the other 97.6 percent of businesses.
Even if merchants get on board by upgrading their payment terminals, shoppers have been slow to jump on the mobile wallet bandwagon. Back in 2009, Money Talks News pondered whether wallets would soon be obsolete. Guess what? They’re not yet.
But Apple brings a big name and a lot of clout, which may be something missing from previous attempts at mainstreaming mobile wallets.
Speaking of those previous attempts, if you’re an Android user (or simply not an Apple fan), we published a rundown of other mobile wallet options earlier this year. You’ll note that Isis had the misfortune of deranged terrorists being associated with the same name, and that wallet is now re-branding itself as Softcard.
Will you be using Apple Pay? Or are you already using a mobile wallet? Tell us which one and how you like it in the comments below or on our Facebook page.