Why Apple Pay is Important for Mobile Payments

Apples recent and long awaited announcement of Apple Pay which brings mobile payments to the iPhone 6, is an important step forward in Mobile Payments for a number of reasons.

Firstly Apple have been building towards this over a number of versions of iOS and the iPhone, it has not just suddenly appeared with the addition of NFC to the iPhone 6. The iPhone 5S added thumb print recognition, an important biometric security for payments. Before that they added Passbook, which was always meant for more than just boarding passes and event ticketing. Since the first version of the iPhone, iTunes accounts – with Credit Card numbers have been integrated into all Apple purchase transactions. This included the Apple Store app where you can buy accessories in an Apple store straight from your iPhone charging your iTunes account and Credit Card. Now that Apple have over 800 Million Credit Cards in iTunes accounts it made sense to leverage that link to make mobile payments easy for Apple users – simply enter the Card CVV number and you are ready to go with a default payment card.

Secondly, Apple are leveraging existing payment channels and infrastructure and not trying to disintermediate the banks or card schemes. They have worked with Visa, Master Card and Amex to implement tokenisation to secure the credit card number and transaction data, making this implementation of Apple Pay more secure than physically using your Credit Card. They will utilise the existing EMV Chip and Pin payment infrastructure which already supports contactless (and hence NFC) payments at Point of Sale. Even though the USA still significantly lags the rest of the world in EMV adoption, things are changing quickly and with liability shifts the retailers in USA will be forced to follow the rest of the world and implement the new payment infrastructure. Contactless payments have already had a huge uptake in Australia on the back of EMV and Chip and Pin is accepted all over Europe and Asia.

Finally they have made it really secure and easy to add other payment cards to the Passbook wallet by just taking a picture of the card. No card numbers are stored on the phone and the card’s token is stored on the Secure Element chip on the phone for transactions. Even if the phone is lost or stolen, tokenisation, thumbprint authentication and being able to erase your data with Find my iPhone will overcome any fears of misuse. Surely that is even more secure than plastic cards in a physical wallet?

So it is now clear that NFC (and the Secure Element) was just the final piece in the puzzle of Apples long term mobile payments strategy of giving their users a secure, easy to use and pervasive way of using their iPhones (and Apple Watch) to pay at Point of Sale and Online. Only question now is when is it coming to Australia? It shouldn’t take too long given the infrastructure already in place – just waiting on Visa and Master Card (and the banks)…

Apple Pay delivers a double whammy, bridging in-store and online mobile payments

Gigaom

Apple didn’t just deliver one mobile wallet at its iPhone 6 and Apple Watch launch event on Tuesday. It delivered two. Its new Apple Pay service, which will launch on the iPhone 6 and iPhone 6 Plus in October, combines two mobile payment methods that are often conflated to represent entirely different types of transactions: using your phone in lieu of plastic to pay at the cash register, and buying goods online over your mobile phone.

[company]Apple[/company] will bridge the two using a unified wallet that consumers will actually want to use and merchants will actually want to accept, Apple CEO Tim Cook said during his keynote (check out Gigaom’s liveblog for all the details from the event). The problem with previous mobile wallets, Cook said, is that they’ve been designed around self-interested business models – for instance, driving dollars into carriers’ own wallets, in the case of Isis/Softcard…

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Apple poised to deliver mobile payment system that just works

Eric Dunstan

Screen Shot 2014-09-04 at 9.06.31 PMI started off my week with a trail run and then a quick stop off at a downtown locally owned coffee joint. The coffee shop is filled with laptop toting Silicon Valley types, local Lululemon wearing trail bunnies and a myriad of salon and spa employees on their way to bill $150 for a 1-hour deep tissue massage. I stood in line and waited to pay for my overpriced cup of coffee. I’m an old school guy and paid in cash while most people paid using their debit/credit card. It seems strange to me to pay for something so cheap with plastic…but, hey, I AM old school right? However, of the 10+ payment transactions I saw, no one paid with his or her phone using the NFC feature of the payment reader. Now don’t panic…you are not the only one who has not seen the NFC technology in action. Very…

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Digital Wallet Battle Heats Up As Visa And MasterCard Enter The Game

Visa and MasterCard take on PayPal with online digital wallet which stores multiple cards, delivery information for faster checkouts.

TechCrunch

This week, two of the major players in the credit card industry, Visa and MasterCard launched their online digital wallet services. Known as V.me (Visa’s) and PayPass Wallet Services (MasterCard), both are very similar initiatives which see the companies clamoring to become the credit card of choice for digital transactions, the way they fight today to be the credit card for all the other transactions taking place out there in the real world.

And, to be clear, a “digital” wallet isn’t necessarily the same as a “mobile wallet,” although a digital wallet service could also be housed in a mobile app interface, as both MasterCard and Visa plan on offering in the near future.

While neither of these companies are the types of early stage startups TechCrunch typically favors, their moves will have an impact on a number of companies already operating in this space, like PayPal and Square, as well…

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Contactless payment here to stay

Coles Supermarkets today announced that they had finally completed the rollout of Contactless Payments across 750 Supermarkets adding another 14,000 terminals to the MasterCard PayPass network that now numbers over 100,000 terminals across Australia. They join 7-Eleven, McDonalds, Bunnings, Dymocks, Australia Post, IGA Supermarkets, Chemists and numerous other retailers gearing up with contactless (tap and go) capability that can shave over 25% of the time off the payment process. Cabcharge has also rolled out over 20,000 contactless terminals in taxis and recently hit the 2 Million contactless payment transaction mark.

7-Eleven, one of the early adopters noted that the payment process can be cut from 35 seconds for a mag stripe / pin entry to 4-6 seconds with contactless, a significant time saver. There have been some consumer security concerns raised (as no PIN is required), but as the transactions are limited to low value (currently under $35) and both Visa and MasterCard have clearly stated that card holders will not be responsible for fraudulent use of their cards – this should not be an issue in the longer run.

A recent Deloitte study stated that 80% of of the total Australian cash transactions are currently under $35 amounting to some $470 Million a day moving through the Australian economy – significant numbers and significant time savings if these switch to contactless.

Consumers will get to love the convenience and speed of payment afforded by contactless and as the number of contactless cards issued by banks increase, the usage and take up will be much wider reducing the use of cash significantly. Currently it is estimated that usage of contactless cards has risen from 7% of the total population last year to over 14% this year with card ownership up to 35%.

Having this extensive contacless infrastructure in place in place puts Australia in a great position with the release of the new iPhone 5 scheduled for late September that is almost certainly going to come out with a Near Field Communication (NFC) chip that will also be able to be used with contactless terminals for tap and go payment. Westpac has just started a pilot program for NFC equipped Android phones with the Google Wallet – which will allow customers to tap their phone instead of their card.