Apple Pay: The future of contactless payment and banking?

We’ve heard rumours of it coming – now Apple Pay is here.  Making strides into the fast-developing world of mobile, contactless payment systems, Apple is shaking up the way things work – again. Dieter Bohn, tech journalist for The Verge, calls the innovation ‘the week’s most revolutionary product’ and it looks like he isn’t wrong. More than 1 million credit cards were registered in the first 3 days of Apple Pay’s availability.[Tweet “More than 1 million credit cards were registered in the first 3 days of #ApplePay’s availability”]

Released on 14 July, the Apple Pay feature allows users to purchase everyday items with compatible devices, such as the iPhone 6 (and 6 Plus), Apple Watch, iPad Air 2 and iPad Mini 3, but does not require Apple-specific contactless payment terminals. This means Visa’s PayWave, American Express’s ExpressPay and Mastercard’s PayPass will all facilitate transactions without so much as a blip.

Although the slogan is ‘Your wallet. Without the wallet’, it might also be ‘Simple, secure and private’ as advertised on Apple’s launch site. If a device is lost or stolen, Apple Pay can be suspended and the device wiped completely if desired.

Here’s how it works with compatible devices:

iPhone 6

iPhone 6 users don’t even have to open the app or unlock their phones. Holding a phone over the contactless reader, with a thumb on the Touch ID to pay option, is enough to initiate payment. Confirmation will be sent by a small vibration and beep.

Apple Watch

Apple Watch devotees need to double-click the side button and hold the display up to the contactless reader. A small tap and beep will confirm payment and you’re done. Who knew saying goodbye to the old chip and pin and the magnetic strip could be so easy? And to increase security, the feature is disabled any time the watch is taken off.  After putting it on again, the user must enter the security code, and sensors will detect whether the wearer is in fact the owner.

iPad Air 2 and iPad Mini 3 (and iPhone 6)

Payment goes through with a single touch by users shopping within the Apple Pay app. After selecting the Apple Pay option, and placing a finger on the Touch ID button to confirm, users are whisked through the wireless checkout in a matter of seconds.

Apple Pay in practice

Outside the US, Apple Pay is accepted anywhere that uses a contactless payment system and thus retail adoption has been automatic. A list of participating shops and services in the UK is now almost redundant, although some early headliners were Boots, BP, M&S, Starbucks and Transport for London. Apps included Argos, British Airways and Ocado.

What it means for businesses

The world of payments is changing, that much is obvious. At a recent presentation by Francisco González, Chairman of the Spanish banking group BBVA, it was revealed that 29% of consumers are willing to bank with Apple over traditional banks and building societies. Edelman’s annual trust barometer showed that in 2015 technology companies are the most trusted sector, while banks have slipped to the second-least trusted. While this is a time of tremendous disruption for the financial sector, it’s probably best for businesses to wait it out and see what permanent changes will be wrought.

In the meantime, here are some things to consider if Apple Pay seems to be right for your business:

1. Keep in mind your customers’ needs. If most of your customers’ bank with someone like Barclays, which has its own contactless payment system (bPay), it may be worth it to investigate that avenue instead of concentrating on Apple Pay. Alternatively, get in touch with clients and see how they feel about going contactless. Small businesses can do this easily then construct a carefully thought-out strategy with the feedback.
2. Not everyone is sold on contactless payment (yet). Don’t rush into adopting a system in its infancy. It’s not worth the hassle of getting everything changed over until the veracity and longevity of contactless payment is proven. Start small and keep options open in these early days. Maybe putting Apple Pay into the employee canteen or car park will test the waters – just let people pay with cash or card, too.
3. Don’t lose track of customer service. This ties into careful acceptance of new technologies. If there’s a problem with the payment system, you’ll lose customers’ good will and trust, in addition to sales. Test the system, train staff and make sure every client-based interaction is positive and as smooth as it can be. When things go right, customers will feel empowered and ahead of the times, but when they go wrong the blame is apt to lie squarely with the company and not the technology.
4. Consider the costs. Small businesses will be hit hardest when it comes to the start-up costs in adopting contactless technology. Each reader will be more than £100, although companies with NFC (near field communication) readers may be able to accept Apple Pay transactions (and many chip readers do include NFC readers).

So, while being an early advocate for Apple Pay will make your business appear tech savvy in the short run, businesses should tread carefully.

Now is the perfect time to see how the new feature fares with similar (and slightly braver – or more foolhardy) businesses and their customers. You’ll lose nothing in making sure the success of the technology will last, and you’ll gain a whole new way of processing payment quickly, securely and efficiently if you adopt Apple Pay when the time is right for you and your company.