Apple Pay, the latest large-scale attempt to move consumers toward the mobile wallet lifestyle, officially launched on October 20, 2014. The new service on the iPhone 6 enables seamless payments without ever showing or swiping a card. Customers can enjoy their transactions in what Apple calls “a simple, secure, and private way.”
The iPhone 6 function allows users to speed through checkout – in person and via apps – using Touch ID to verify their identity. The technology behind this process is called Near Field Communication (NFC), which, through the use of an antenna, sends information between devices, e.g., from a smartphone to a point-of-sale terminal.
With three major credit card providers and six banks currently behind Apple Pay, the payment service seems like it could be a great success. American Express, Bank of America, Capital One, Chase, Citi and Wells Fargo are all compatible with the payment method. Even Discover, noticeably absent from the initial list, will be hopping on the Apply Pay bandwagon eventually, according to CEO David Nelms.
Apple’s ambition to replace the wallet in the pockets of consumers has been lighting up the Internet since it launched. Perhaps the most interesting development in the Apple Pay media coverage (despite the double charge glitch with Bank of America) is the announcement that the Merchant Customer Exchange (MCX) will launch its own pro-retailer payment system, CurrentC, in 2015. Backed by major retailers like Walmart, CurrentC seeks to keep credit card companies out of transactions – and eliminate interchange fees. This development could keep retailers from joining the long list of merchants that are already pro-Apple Pay.
CurrentC, in addition to being a fee eliminating system, appears to be a data collection initiative for retailers. Unfortunately for MCX, CurrentC has already suffered one data breach, which does not bode well for consumer privacy. Conversely, one of Apple Pay’s major selling points is data encryption, keeping mobile transactions private and secure. If retailers continue to block the Apple Pay system, just as Rite Aid and CVS did in the first week of availability, Apple Pay may struggle to catch on. However, if privacy remains a central consumer concern, Apple Pay seems to have the advantage.