Connect with us

Cover Stories

Special Feature: Card Games

mm

Published

on

Card Games

Apple Pay has launched. Will it succeed in mobile payments where others haven’t?

This article originally appeared in the February 2015 edition of INSTORE.


STORY By Chris Burslem

There is little that is revolutionary about the technology behind Apple Pay. Contactless payments have a history that dates back 17 years in Asia. Google Wallet has allowed Americans to pay via their Android phones since 2011, and even Microsoft, the fall guy of so many Apple ads, has offered the technology, known as NFC, or near-field communication, in its phones for two years.

No one, however, has yet been successful in ushering America into an era of widespread swipe payments. Apple, thanks to its marketing power and name recognition, believes it can.

There are reasons for merchants to love NFC technology and Apple Pay, which was unveiled late last year and works on the new iPhone 6 and will be available on the soon-to-be unveiled Apple Watch. They include:
Ease of use. Apple Pay users load their credit card information onto the phone, then simply press their device’s Touch ID fingerprint scanner at the checkout to authenticate the purchase.

Advertisement

Security. Apple generates a unique ID number for each transaction, meaning users’ credit card data is not shared with merchants. Fingerprint identification takes the fraud burden off merchants’ shoulders as well (a good thing as in late 2015, merchants will be responsible for fraud, not credit card companies.)

While it has potential, a number of factors suggest Apple Pay won’t have the “disruptive effect” on the payments system that the iPhone had on the cellphone market.

Andrea Riso, who in addition to being the owner of jeweler Talisman Collection, in El Dorado HIlls, CA, works as a consultant on IT security projects, says she “can’t wait to get” Apple Pay.

“The security, compliance and efficiency are equal or better to other comparable payment systems currently available,” she says, adding that she envisions the potential to provide more seamless customer service.
But there are also reasons for merchants to be less than enamored with Apple Pay, including:/p>

The cost: To add a reader and update the software will probably cost a store owner about $300 per POS terminal.

The loss of access to customer data: Because Apple Pay won’t collect data on the user, merchants won’t be able to automatically record client data, hurting their ability to deliver ads and offers. To get a loyalty discount, a customer using Apple Pay would still have to hand the cashier her rewards card, which defeats the frictionless purpose of one-touch checkout.

The history of payments processing in the U.S., the chicken-and-egg nature of new retail technology adoption and the fragmented market (Walmart and other big retailers are supporting a rival contactless system), suggests Apple Pay won’t have the “disruptive effect” on the payments system that the iPhone had on the cellphone market.

Advertisement

Nevertheless, NFC payment systems should start to gain momentum toward the end of this year, as MasterCard and Visa are requiring all their merchant accounts to transition to “EMV” credit cards by October. As a result, many store owners will have to upgrade their systems to support the so-called chip-and-pin technology and vendors will likely throw in NFC support as well.

Raffi Minnassian, whose firm produces the BusinessMind POS system for jewelers, believes NFC will become standard technology in all POS systems used in the jewelry industry within six to 18 months. If you are already with a payment processor that supports it, you will simply need a reader and a software update, he said.

Whatever happens, all merchants will have homework to do. When we asked the Brain Squad recently about their POS systems, only 9 percent said their devices had an NFC capability, while 74 percent didn’t. The remaining 27 percent weren’t sure.

Continue Reading
Advertisement

SPONSORED VIDEO

Wilkerson Testimonials

Downsizing? Wilkerson Is Here to Help

Orin Mazzoni, Jr., the owner of Orin Jewelers in Garden City and Northville, Michigan, decided it was time to downsize. With two locations and an eye on the future, Mazzoni asked Wilkerson to take the lead on closing the Garden City store. Mazzoni met Wilkerson’s Rick Hayes some years back, he says, and once he made up his mind to consolidate, he and Hayes “set up a timeline” for the sale. Despite the pandemic, Mazzoni says the everything went smoothly. “Many days, we had lines of people waiting to get in,” he says, adding that Wilkerson’s professionalism made it all worthwhile. “Whenever you do an event like this, you think, ‘I’ve been doing this my whole life. Do I really need to pay someone to do it for me?’ But then I realized, these guys are the pros and we need to move forward with them.”

Promoted Headlines

Most Popular