What’s all the fuss about Apple Pay?

B2B | Geofencing | SFBJ | Smartphone Apps

Reprinted from South Florida Business Journal

In Competitive Advantage, we have been predicting that mobile commerce would be coming since 2012.

While other systems – like Google Wallet and Softcard – popped up, they did not take off. But they’re becoming more popular with the launch of Apple Pay.

I asked Brett Circe, chief interactive officer and partner at Starmark, to explain why consumers should want to pay by phone and support mobile commerce: The main reason is security. And, before you dismiss “security” as some utopian fantasy or marketing buzzword, know that this is why mobile commerce will become relevant.

Apple Pay uses near-field communication (NFC), which passes encrypted data back and forth, and uses a one-time-use token for transactions. The company never sees or gets your credit card information.

Could data breaches at Target or Home Depot have been less severe using mobile payment methods? Possibly. Certainly, the publicity and number of people affected by these credit card breaches will only drive users to want to keep their data more secure.

Why Apple Pay over Google Wallet? Both are good. Google Wallet requires you to enter a PIN code to transact; with Apple Pay, you use your thumbprint to transact. Even if someone stole your digital wallet, they can’t access the cards inside without that second level of verification.

What about the personal privacy of paying by phone? When it comes to privacy, Apple does not use your purchase history to target you for ads or content. Although Google Wallet claims not to use your transaction information for ad targeting, the public may continue to be skeptical.

How will we “actually check out” at retailers using our phones? Since 2011, Verifone has included NFC antennas, which allow mobile payment in their retail checkout terminals. Many retailers got them by default when they installed or upgraded their terminals. So the mobile payment infrastructure has been rolling out for years.

So, why are some retailers disabling their NFC antennas only a week after the Apple Pay launch? A consortium of retail giants has formed the Merchants Customer Exchange. This alliance wants reduce fees associated with credit cards. So they developed a system, CurrentC, that connects to checking accounts (or debit cards) instead of credit cards. You can then scan a QR code to check out without credit card transaction fees.

Using cash-based systems is not new. Think of Cash by Square, Venmo and others. They all connect to a checking account instead of a credit card.

As a marketer, how can you take advantage of this change in purchase behavior? You can accept Apple Pay, even on your website. It makes marketing sense that companies, especially those that want to reach millennials, allow customers to give them money in all available ways. That includes credit cards, mobile wallets or Bitcoin. The easier you make it for people to spend, the more likely they are to buy.

The bottom line: If Apple Pay proves to be both secure and easy to use, it will be more successful than its predecessors and unavoidable for most retailers.