Apple may accelerate push on mobile payments

With its new mobile payment system, Apple is likely to use its market power to accelerate adoption of smarter retail payment technology and boost security amid growing concern over hacking.

Apple, as part of an ambitious series of product announcements Tuesday, unveiled its ‘Apple Pay’ system that will allow consumers with the upcoming iPhones to tap their handsets at retailers instead of using debit or credit cards.

Apple chief Tim Cook said the Apple Pay system would replace an ‘antiquated payment process’ with ‘an entirely new’ system offering greater convenience and security.

Cook said that each day in the US, alone, “that’s 200 million times that we scramble through our credit cards and go through what is a fairly antiquated payment process.”

Apple Pay will use a dedicated secure chip that communicates with a retail terminal through a near-field communication (NFC) antenna in the phone. Even though this technology has been available for years, adoption in the US has been slow because of competing standards, analysts said.

Cook said other efforts have failed because the companies introducing mobile wallets were working on the basis of their self- interest instead of the user experience.

Apple has lined up most of the largest US banks for the system, and many big retail outlets have agreed to install compatible payment terminals.

This helps solve the ‘chicken and egg’ conundrum that has prevented widespread adoption of mobile payments, said Roger Kay at Endpoint Technologies.

“You need consumers to get the enabled systems, and retailers and banks to process all that,” Kay told AFP.

“No one wanted to move before anyone else did. So if Apple gathers a group of partners, it may establish a base of functionality that will work.”

Apple Pay supports credit and debit cards from American Express, MasterCard and Visa, issued by banks including Bank of America, Capital One, Chase, Citi and Wells Fargo, representing 83 percent of credit card purchase volume in the US.

The payment system will launch in October at some 200,000 retail locations, including Bloomingdale’s, Duane Reade, Macy’s, McDonald’s, Sephora, Staples, Subway, Walgreens and Whole Foods Market.

“Security and privacy is at the core of Apple Pay,” said Apple vice president Eddy Cue.

“When you’re using Apple Pay in a store, restaurant or other merchant, cashiers will no longer see your name, credit card number or security code, helping to reduce the potential for fraud.

“Apple doesn’t collect your purchase history, so we don’t know what you bought, where you bought it or how much you paid for it.”

Payments can also be made through the new Apple Watch, which will allow users of older iPhones to use the system. — AFP