Apple Pay, Apple’s contactless payment technology launched
one month ago—on October 20th—allows iPhone 6, 6 Plus, and Apple
Watch owners make payments using their devices’ NFC.[i]
NFC is a short-range wireless communication that uses a smaller antenna than
the wavelength of the carrier signal.[ii]
To pay, Apple Pay users just hold their iPhone near the
contactless reader at the POS while placing their finger on Touch ID and a
vibration and beep will confirm that the payment was successfully sent. To set up
Apple Pay, users store their credit or debit cards on Passbook. They can add
the card from the iTunes account by entering the security code, and additional
cards by taking a picture or typing the number.
The main benefits Apple Pay offers are convenience and security,
since you don’t have to expose your card and personal information and it won’t
even be stored by the store nor by Apple. If the phone is lost, the user can deactivate
it online.
Apple has partnered with Visa, MasterCard, and American
Express and has signed deals with major banks such as Bank of America, Chase,
Citi, and Wells Fargo, which are responsible for 83% of all credit card volume.[iii]
Because Apple Pay is based on already
existing NFC technology it works in more than 220,000 locations that accept
contactless payments.
The question arises: How long will it be until Apple’s
competitors copy this system? Will this achieve a really high penetration,
making the use of physical credit cards obsolete any time in the future?
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