Yesterday Apple presented three new products, the new iPhone 6 models, the Apple Watch and Apple Pay. While the first two represent new hardware, in the case of Apple Pay we are looking at a mobile payment service . To convince us of the benefits of his proposal, Tim Cook threw a few numbers onto the stage.
The first is that every day there are more than 12 billion dollars in debit and credit transactions in the United States, in a total of 200 million transactions per day. If we do the math, we get about $60 each. The volume of money that moves electronically makes any company that has tried to solve the puzzle of mobile payments want a piece of the pie. Even if it is a tiny percentage of the transactions, it would be a very appetizing flow of money.
Here’s what Jenna Wortham said in the New York Times:
Which led Cook to comment as follows on why this problem remains unresolved :
A type of problem that Apple is usually expert at solving. Let’s see how they intend to achieve this in the next section.
Ease, security and privacy: the three pillars of Apple Pay
To explain the ins and outs of this new mobile payment system, Apple has turned to Eddy Cue, vice president of Software and Internet Services. The first element they have talked about is Secure Element, a specific chip of the new iPhones 6 in which bank data is stored and encrypted . An NFC chip would enable communication with Contact Less payment terminals. On the software side, Passbook will become our virtual wallet from which we will manage our mobile payments with Apple Pay. This way, when we are going to pay in an establishment we will bring our iPhone close to the terminal and we will confirm the purchase with Touch ID.
Cue highlighted the ease with which cards can be added to the system . When you launch Passbook for the first time you will be asked if you want to use the card associated with your iTunes account. With this move, Apple would be recruiting all future owners of an iPhone 6 or iPhone 6 Plus for its system. The passage of time and the successive iterations of the iPhone could well place you in a prominent position among the “players” of mobile payment. Passbook also allows you to add new cards through the iPhone’s camera, checking in the process that it actually belongs to us.
Regarding security, Apple does not store card details or share them with the retailer . They create a unique number for each device and store it in Secure Element. A one-time use number is generated for each payment as well as a dynamic security number instead of the one printed on the back of the cards. Find My iPhone can be used to stop payments on our device if we lose it and without having to cancel our cards, among other things because they are not stored there.
Olvídate de la cartera para siempre con Apple Pay y el NFC del iPhone 6.
This is how the executive of the block was dispatched in a dart that was in clear reference to his competition. He himself assured us that with Apple Pay his company would not know what we bought, where or for how much. In addition, the person who charges us will not see our name or card details . Apple seems to take this aspect quite seriously.
Apple doesn’t get there first, but it could be the first to get it right
But they did not want to be satisfied with just proposing their own solution to mobile payments, they also integrated it into the apps. A set of APIs made available to the developers will take care of this. Paying from an app without the tedious data form we have to fill in or paying the restaurant from an app are some of the advantages mentioned.
Good ideas but many unanswered questions
Apple Pay is an interesting mobile payment system but it certainly leaves many questions unanswered. For example, Apple never clarified what kind of commission they will charge merchants for using this system. Or if they will do it to the banks or if it will be free. If the latter, how do you plan to “pay” for the maintenance of the service, a “subsidy” charged on the price of the new iPhones 6? Whoever pays for this service will be key in determining its expansion, deployment and subsequent real utility.
The second unanswered question is when they will make the jump to Europe. The NFC system and Contact Less used by the new iPhones are ahead of North America . The speed with which they reach this market will also be a prerequisite for gaining traction among the public and traders.
It remains to be seen what kind of security requirements the authorities might establish in this regard. Will they require a document to be presented despite confirming purchases with Touch ID? This would greatly hinder the adoption of the system and the user experience.
Apple has commented that the Apple Watch also has an NFC chip for mobile payments, just like the new iPhones 6. But how will the payment process be? Where is the double confirmation that exists on the iPhone (proximity and Touch ID)? This is something we will have to wait until the launch of the Apple Watch next year.
Apple Pay is a good first step towards the ultimate popularization of mobile payments. It is foreseeable that with time and successive iterations of the service we will see a more rounded product that can succeed where others have not yet taken off completely or have failed. This company is not usually the first to reach the market but it is usually the first to do it well. But to do so, Apple will have to face these and many other challenges.
Update: According to a MacRumors article quoting Bloomberg, Apple would charge banks an undetermined amount for each transaction made with Apple Pay.