Apple Pay's First Few Months
February 10, 2015 9:30 AM
Apple's mobile wallet has been out for just four months, and already it has shaken up the way mobile payments operate at the point of sale. It has faced pushback from some merchants and banks, but it has also popularized new forms of security and other payment technology.
Tokenization Takes Off
Apple Pay's endorsement of tokenization, which protects card data by replacing it with a secure "token," has energized other efforts to spread the security technology. For example, MasterCard has plans to expand tokenization to its other digital payment initiatives, starting with the MasterPass wallet.
(Image: iStock)
Biometrics Blossom
Following Apple Pay's implementation of Touch ID fingerprint authentication for payments, many other companies have begun using biometric security on the iPhone and other devices. Apple also uses EMV security even when the linked card does not have an EMV chip.
(Image: Bloomberg News)
Reputation Repairs
Apple Pay had a bumpy launch. It debuted right after Apple's iCloud was linked to a leak of celebrity nude photos. Additionally, some early users reported seeing duplicate charges on their statements, and the required iPhone 6 had a slight tendency to bend due to its size. But as time passed, Apple overcame these concerns, and today it accounts for two thirds of the contactless payment volume in the U.S.
(Image: iStock)
Merchants Push Back
Immediately after the mobile wallet's launch, retailers CVS and Rite Aid which are committed to the merchant-backed CurrentC wallet stopped accepting contactless payments of any kind. This move favors CurrentC, which is being designed to use QR codes displayed on a phone's screen.
(Image: iStock)
Big with Banks, Credit Unions
Despite some pushback from bankers who consider Apple's terms one-sided, the tech giant has signed on 750 banks and credit unions to support Apple Pay by linking their payment cards.
(Image: iStock)
Slow Spread Overseas
The Apple wallet is already encountering some resistance overseas. According to reports, at least one major U.K. bank is not welcoming of Apple's terms.
(Image: iStock)
Attention to Apps
Even though the U.K. already uses EMV security at the point of sale, Apple Pay's in-app security for payments could help the country combat card-not-present fraud. "The breakthrough is that Apple has taken the card-present EMV into the in-app space," said Dave Birch, a director at Consult Hyperion.
(Image: iStock)
Competition Cools Off
After Apple Pay's debut, several other mobile wallet initiatives started to fade. The U.K.'s Weve tabled its planned wallet, Amazon.com quietly pulled its beta wallet app, and Softcard (despite a surge in marketing) cut its staff and offices and is rumored to be for sale. There are still many other mobile wallets in play, but Apple Pay is gaining ground.
(Image: iStock)
