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Payments September 9, 2014

What Apple Pay and iPhone 6 Mean for Your Business

The iPhone 6 was just announced and if you were on the fence about mobile payments and digital wallets, you have a few months to decide if you are ready to upgrade your POS system to accept these transactions. Earlier this year, we covered some of the  rumors surrounding apples ascension into mobile payments and voila, much of this has been confirmed.

Get ready for thousands of articles talking about the new features. As a consumer, there was plenty to be excited about. Maybe you care about sending 3D animated smiley faces to a significant other or having predictive typing on the iPhone 6. 

But you also run a business... 

And today's conference opens up a whole new list of things to consider for your Point of Sale (POS), payment processing technologies, and the future of how you will accept payments.

2 of the biggest announcements were:

  1. Apple Pay (what I will probably always call iWallet) is here and will allow users to store payment information and pay with “Touch ID” and via the Apple Watch.
  2. Major retailers, restaurants, ecommerce sites, and grocers are going to be accepting mobile payments via Apple Pay

The Apple Pay and iPhone 6 announcements have essentially ushered in the next wave of support and excitement over the mobile payments space. It has been thrust into the minds of the consumer as well as in the crosshairs of developers, entrepreneurs, and financial institutions and will be impossible to not talk about in the coming months as developers get their hands on the SDK in October. 

Here’s a quick breakdown of the developments and why you, as a business owner, will want to follow the surely unending stream of media that will cover Apple Pay and the iPhone 6.


What is Apple Pay

In a slightly higher quality version of a “There’s got to be a better way!” As-Seen-on-TV ad, Tim Cook shows us the painful “old” way of paying for items via credit card. While quite obviously a prolonged, worst case scenario, the point is aptly made when, in the subsequent video, the payment via iPhone 6 and Apple Pay took an impressive 3 seconds. Check out the video from the conference (From CNET):

For a consumer, it’s a dream. Secure, fast, and easy, the idea is to make your phone a payment solution for all things retail and ecommerce.

Primary selling points (for consumers):

  • Save all cards in the Passport app
  • Use Touch ID to pay at a Near Field Communications (NFC) enabled POS system
  • Incorporate this with Apple Watch for even easier payment
  • Super secure - no physical cards to carry, one-time transactions with layers of security, Touch ID, easily wipe all cards using “Find My Phone” App.
  • Transactions are between customer, merchant, and bank only - Apple knows nothing of it
  • Covers 83% of payment market (between Amex, MasterCard, Visa and 6 major banks with more on the way)
  • Wide potential adoption by retailers, restaurants, and ecommerce sites
  • Works within apps to facilitate payments

Primary selling points (Businesses):

  • Third party apps that use Apple Pay will use Stripe
  • You can allow for self-service payments / express checkout (they use Uber, OpenTable, and Groupon as examples)
  • Customers can always have an accepted payment solution on hand
  • One-Tap checkout within apps and ecommerce sites - near frictionless transactions
  • With the iWatch, the established iPhone 5 line of phones can use Apple Pay (bigger initial user base, no wait for significant adoption)
  • Apple has far more pull than previous mobile wallet solution efforts (Google Wallet) and can inspire customer confidence in the service
  • Security and anonymity for the user can transfer trust to establishments that accept Apple Pay.


Major Adoption

Think about the consumer. If you are constantly bombarded with and offered a certain type of experience, you will come to expect it in similar transactions. With major retailers and restaurants like McDonalds, Macy’s, Bloomingdales, Walgreen’s, Subway, Wholefoods, and even Disney accepting Apple Pay, what will your customers expect of your business in a few years, when the iPhone 6 is the base model for all new Apple users? How many competing locations will accept these payments?


It's a Logical Step

It’s worth noting that phones are like an extension of many users. We carry our phones everywhere and already use them to research, purchase, and start transactions anyway so the next logical step is to use it close those same transactions in a standardized and familiar interface. 

The scene had been set:

  • Other wearables have carved acceptance (yet perhaps not significant adoption)
  • Security breaches have created a hunger for a more secure way to interact with merchants
  • Competitor success and consumer demand for larger displays is high

A huge corporation like Apple could afford to make leaps into unknown territory, but as with every major announcement today (Apple Watch, Apple Pay / Wallet, and Larger Screens) they wait for viability within the market and an obvious need for the products or service.


Conclusion

Mobile payments, wallets, and seamless transactions are going to be expected of a modern business in the coming years. You may be well enough avoiding Near Field Communication payments for now, but don't be surprised when a customer comes in with nothing more than a phone in their pocket and an Apple Watch on their wrist. It's happening, it's exciting, and it's going to be fun to watch take off.

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