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Can Apple Pay help you improve your customers' transaction experience?

22nd Oct 2014
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Monday saw the US launch of Apple’s much lauded new mobile payment system - Apple Pay - but only time will tell whether it’s as efficient and revolutionary as its makers claim. If it is successful, it could change the way in which your customers pay for purchases and help you improve their transaction experience.

What’s all the hype about?

It’s Apple for a start. There’s always lots of anticipation and publicity surrounding what Apple will do next, given their transformative effect on the mp3, tablet and smart phone markets. Their products command a certain reverence amongst their fans, and with over 500 million iPhones sold to date, those fans are certainly numerous - and potentially a large part of your customer base.

But the basics of Apple Pay are nothing new. You’ve probably seen, heard, or used the technology before, as it utilises the same near field communication (NFC) technology as some existing mobile apps, and a number of credit and debit cards. You simply hold your card to the machine reader, and data is transmitted.

No more fat wallets 

Whilst it may be the same basic technology, Apple are claiming that Apple Pay will completely transform the mobile payment industry. Customers have been slow to take up contactless payments systems both because of fears of security issues and concerns over complicating transactions with confusing technology at the till.

Apple are aiming to change our conceptions of mobile payments, and make the process smooth and simple, as they arguably have done with iPods, iPads and iPhones. According to CEO Tim Cook, Apple Pay will “change the way you pay for things forever.”

The overall aim for customers is that they won’t have to worry about carrying fat wallets or bulging purses with them wherever they go, because all their card details will be securely stored on their iPhone. With one touch, payment should be made quickly and efficiently, with no hassle involved at all.

  • Step 1 - Add a card to your Passbook via your iTunes account, or simply take a picture of your card with iSight, for all details to be inputted automatically (you just verify with the security code).
  • Step 2 - In store, hold your phone up to the card reader, with your finger on the TouchID fingerprint sensor. There’s no need to worry about unlocking the phone or entering pin numbers.
  • Step 3 - If your finger print matches, payment is made quickly and securely.

If Apple Pay is as easy as this, it could make for a very smooth customer transaction.

Additional features such as in app purchases with a single touch, much like Amazon’s ‘One-Click Buy’ could also help see Apple Pay change the consumer’s experience and place a strong foothold on the mobile payment system market.

The security of your customers’ details

One of the main reasons why experts claim mobile payment technology hasn’t taken off already revolves around the security of it. Apple Pay could be what’s needed to reassure customers.

  • It’s TouchID feature means that only those with recognised fingerprints will be able to authorise a payment from the iPhone. Whilst you can forge a signature and maybe guess a pin number, thieves would be hard pressed to copy a fingerprint if your phone was stolen.
  • Using a complicated encryption system, Apple Pay ensures that no specific card details are actually kept on your phone, on their servers, or in merchant databases. Instead, tokens are passed between your bank and the merchant, which make the transaction extremely secure. Even it were hacked, the details found would be useless.
  • And for added piece of mind, you can always wipe all information on your phone with the Find My Phone app, should you lose your iPhone or have it stolen.

All of these security features theoretically make Apple Pay much safer to use than cards or cash, and could be the spark the customer and the industry needs to fully adopt mobile payment systems.

Are contactless payments the way forward?

So are contactless payments the future, and is Apple Pay something which your customers will want to embrace and use?

The UK currently has one of the highest rates of adoption of contactless payments in Europe, with over 40 million contactless payment cards in daily use and 500 million contactless transactions predicted for 2015. Use of the technology is certainly increasing, and more and more customers are expecting the opportunity to pay by this method when it comes to transactions at the till.

However, the UK currently has a £20 security limit on all contactless transactions, so paying for goods over £20 with Apple Pay would be impossible. Plus, the costs to upgrade your current POS readers to accept NFC payments can be quite high, especially if your customers aren’t going to use it.

All merchants are required to upgrade their card readers to avoid liability in line with new anti-fraud regulations which take effect in October 2015, so it may be worth considering the requirements of Apple Pay at that time.

The key is seeing whether Apple Pay gains widespread adoption in the USA.

Giving customers what they want

UK businesses have the benefit of seeing the impact Apple Pay has in the US before they need to act. If Apple Pay is successful over there and all the signs continue to point towards a surge in use of contactless payments, then it’s likely to be the way forward here.

It’s highly unlikely Apple Pay will be a massive flop, so some customers are going to want to use it. If you give the option, you’re probably going to stand out amongst your competitors. Just remember though that it has its limitations, and you shouldn’t offer Apple Pay to customers at the expense of other payment options like Google Wallet or Paypal. The best businesses will offer customers a variety of payment methods.

Apple Pay is a technology to watch, and as it only stands to evolve and grow over time, it could mark the beginning of a change in how your customers expect to pay for services. Don’t rush into embracing it, but do pay attention to its adoption in the US. 

Nick Pinson is the director at iWeb Solutions.

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