Not unlike so many other things launched by Apple over the years, Apple Pay has certainly stolen its share of headlines, both favorable and unfavorable. While it might be a bit too early to weigh in on exactly what the deal is with Apple’s entry into the world of contactless payment, we thought we’d take a closer look to bring you up to speed.
Consumers seem to be warming up to mobile payment systems in general. So Apple Pay has been fairly well received with this crowd. However, alternative payment systems at retail are off to a slow start. So a bit of perspective on this topic is needed before we move on to Apple Pay specifically.
A Small Foothold
According to online researchers comScore, regarding of contactless payment tech, there are approximately 220,000 NFC-enabled merchants in the U.S. today. And that’s out of the roughly nine million total merchants in the country. So as you can see, mass adoption of this payment method is likely still years off from the present day.
However, worth noting for all retailers is this piece of news, which most of you are undoubtedly already aware. As of October 2015, merchants who do not support EMV credit cards will be held liable for the fraudulent use of counterfeit, lost and stolen cards. EMV are the new smart cards with integrated circuits that enable point-of-sale authentication and help prevent fraud.
These new EMV cards will be read at the point of sale by inserting the end of the card featuring the chip into a payment terminal. There is no swiping the familiar magnetic stripe on the back of the card. The consumer will then enter a PIN to authorize the transaction.
The idea here is that the EMV cards are significantly more difficult to counterfeit than “standard” credit cards. We are told by research firm Aite Group that about 14% of U.S. retailers currently support this technology and only a very small percentage of consumers’ credit cards incorporate these chips. These numbers are expected to increase rapidly throughout 2015 as most of Europe has already successfully embraced this technology and the rest of the world is following. Both MasterCard and Visa are reportedly pushing aggressively for its adoption here in the U.S.
In Tune with Apple?
Timing being everything in life, Apple’s appears to be pretty good on Apple Pay, as they usually are with everything else they bring to market. However, Apple’s new payment system apparently is facing a few, well, speed bumps of sorts. Chief among them is the recently formed retail consortium called Merchant Customer Exchange, or MCX. It has created an app called CurrentC. MCX is comprised of Walmart, Gap, Rite Aid and CVS, among others.
The most obvious appeal of the CurrentC app is the fact that it connects directly to users’ checking accounts. This cuts out the credit card companies and their fees. This is a big deal for retailers, particularly the larger ones, as those fees can add up over a year. The problem is the app relies on scanning QR codes at the checkout counter. This isn’t exactly cutting-edge tech for today’s consumers. Especially when compared to Apple Pay’s far cooler and much easier wave of the phone.
Toss in recent computer vision start-up Jumio’s new product, dubbed BAM Checkout, also aimed at improving the mobile checkout experience for consumers. It’s safe to assume these waters will get even muddier.
Cede Control to Apply Pay?
So here’s the ultimate question for retailers when it comes to the future of contactless payment. Do you cede some control to Apple and think about how a system like Apple Pay will probably lead to more sales as it gains steam and comfortability with consumers? Or do you follow the CurrentC tide to gain on the savings from cutting out credit card transaction fees?
Though Apple enjoys a dominant market share here in the U.S., what about all those Android aficionados out there? The aforementioned Jumio solution is indeed cross-platform ready.
Completely contactless payment is coming. Whether retail goes its own way regarding mobile payment or latches on to a system like Apple’s will play out over the next year or so.
Like most decisions that involve your bottom line, the consumer will undoubtedly be making this one for you.