Apple Pay seeks to revolutionize payment technology and process by making purchases are more convenient and secure by redesigning implementation of existing technology and the addition of new ones.
The use of existing NFC technology coupled with Apple’s new security technology allows users an easy transition to the system while maintaining top of the line security features for each transaction.
Apple Pay is integrated into the existing iOS Passbook application, which already stores the user’s discount cards, rewards cards, tickets, etc.
As Apple Pay becomes available, users will be able to simply add multiple credit cards into their existing collection and start using it from there, making the transition to Apple Pay easy and simple for users.
Furthermore, Apple Pay will also be integrated with in-app purchasing for payments for online retailers directly through the apps, while also using the same security technology.
Click here to learn more about how users will add their credit cards.
Taking advantage of the iOS’ large user base, Apple hopes to universalize their technology by making the process of integration easy for both the users and vendors.
To add Apple Pay as a method of payment within stores, the system will not require Apple – specific hardware, using existing NFC terminals used by conventional tap-to-pay cards, allowing easier implementation for vendors. Through this method, it can be predicted to boost the implementation stage of Roger’s Theory of Diffusion innovation.
As a result, as more vendors are available to accept Apple Pay, the value of the system will be expected to increase, as the convenience will convince more people that it will truly be able replace the current process of using credit cards.
A problem that Apple Pay faces is the required cooperation of credit card companies and retailers in order to be able to universalize their technology as they control the monetary exchange of goods and services between the business and the consumer. This poses a problem as it delays the potential worldwide implementation of the system.
Although Apple Pay does not require Apple – specific hardware, the adoption of NFC terminals and tap-to-pay systems especially in local, small scale retailers has been slow in the US, which is their main market. The problem will then be slow adoption of the system, making the benefits unclear if vendors that do accept it are rare. This is also an obstacle that Apple has to overcome to prove the benefits of the system.
Furthermore, banks are reluctant to adopt and agree to the terms of Apple Pay, as they may pay up to 25¢ per $100 in transactions. This could potentially hurt the banks’ profits as Apple Pay becomes widespread, reducing the number of potential banks adopting. In addition to this, the technology may be disruptive to many small retailers as they may not be able to afford the NFC terminals, or pay for extra bank fees if they were to accept Apple Pay. In addition, credit card companies charge merchants a 2% fee This is disruptive for many low-margin retailers as it has a huge impact on their profits. One critic concludes how there is simply no incentives, lower fees, discounts, or reimbursements to small merchants for implementing Apple Pay
Apple Pay’s main competitors in the digital wallet industry are the likes of Android Pay and Samsung Pay. When we look at Apple’s share within the smartphone market we can see that it is overtaken by the popularity of Android and one of its brands, Samsung. Currently, Android possess over 50% of the smartphone market and is set to release a similar competitor to Apple Pay called Android Pay. Furthermore, Samsung is also finalizing their release of Samsung Pay, which is able to work with traditional magnetic credit card terminals. This means that they will work with every vendor that accepts credit cards, enabling Samsung for potentially even greater adoption ability for its service. In addition to this, Android Pay will reportedly support merchant rewards programs to provide incentives when using Android Pay, a feature that Apple Pay does not currently have.
Faced with these circumstances and the additional features competitors have, Apple must take advantage of their head start in the digital wallet industry by cooperating with various banks to release Apple Pay globally in order to solidify their position ahead of the competition.
In the current state of Apple Pay, many people are skeptical of its entrance into the mobile wallet market. While Apple Pay is a more efficient way to pay, very few people are actually using the software because they are having trouble with finding merchants, especially smaller, local retailers who are interested in Apple Pay.
If merchants are not interested in Apple Pay, then consumers will not have a reason to even start using it. Another problem is that Apple Pay is only available on the newer generations of iPhones, the iPhone 6 and 6 Plus. This causes an uneven divide between users where the majority do not have access to Apple Pay.
As a result, the general reception of Apple Pay has been poor. Without the convenience of widespread availability for users, the service will continue to decline if Apple does not implement procedures to increase adoption by the banks, merchants, and users.
To conclude, based on available statistics, critic reception, facts, Apple Pay is in a fragile condition in its current state. Their technology leaves much to be desired as there are features that are not available in Apple Pay at the moment that competitors such as Android Pay and Samsung Pay have. With Apple’s track record with their other products they have proven to be that there is always potential and it is important to be optimistic with their new releases. However still lies the major problem of banks and merchants that Apple must convince to change their systems to be compatible with Apple Pay.
Since Apple Pay is only available on the iPhone 6/6 Plus, Apple has limited their own user base by being compatible with those devices. Therefore Apple must encourage new and existing customers to upgrade to their newest phone, another factor that may increase uncertainty of the end success of the system. In general, Apple Pay’s future is uncertain as their foundation is not solid, but until there is are better alternatives launched, it is still a frontrunner in the market for digital wallets.
