Apple Pay Now Competes With Google Wallet, LoopPay and Softcard for the Virtual Mobile Payment Service Market
Apple Pay Now Competes With Google Wallet, LoopPay and Softcard for the Virtual Mobile Payment Service Market
Apple released its virtual mobile wallet Apple Pay on Monday, October 20, alongside iOS 8.1, the next upgrade to the Apple mobile operating system which powers the new service. With Apple Pay, customers can buy merchandise at participating stores with just the tap of one of the new Apple 6 or 6 Plus iPhones, or the Apple Watch-compatible iPhone 5s, or the newly released iPad Air 2 and iPad mini 3. Apple Pay supports credit and debit cards from the three major payment networks - American Express, MasterCard and Visa. A transaction can be authorized with the Touch ID fingerprint reader.
To use the service, you take a picture of your credit cards and add them to the iPhone's Passbook. You can also add credit cards through your iTunes account. The actual card numbers, the card security code, your name and other personal information are not actually stored either on the phone or with Apple. For each transaction, Apple Pay will create a 'dummy' account so if a hacker gets to it, what they got is just useless information. Instead of exchanging your card number with a retailer, the system will be sending a 'payment token' as a substitute.
Payments with Apple Pay is immediately available at launch at the 262 Apple retail stores in the US, as well as at such leading retailers as Aéropostale, American Eagle Outfitters, Babies "R" Us, BJ's Wholesale Club, Bloomingdale's, Champs Sports, Chevron and Texaco retail stores including ExtraMile, Disney Store, Duane Reade, Footaction, Foot Locker, House of Hoops by Foot Locker, Kids Foot Locker, Lady Foot Locker, Macy's, McDonald's, Nike, Office Depot, Panera Bread, Petco, RadioShack, RUN by Foot Locker, SIX:02, Sports Authority, SUBWAY, Toys"R"Us, Unleashed by Petco, Walgreens, Wegmans and Whole Foods Market. For online shopping, apps with the ability to use Apple Pay at launch include: Apple Store app, Chairish, Fancy, Groupon, HotelTonight, Houzz, Instacart, Lyft, OpenTable, Panera Bread, Spring, Staples, Target and Uber. All in all, Apple Pay is accepted at about 220,000 U.S. merchants.
Apple Pay is the latest addition to the virtual wallet service business, joining Google Wallet, Loop Wallet, and Softcard. However, according to Consumer Reports, Apple's new Apple Pay "looks like an also-ran." The report notes: "The Achilles Heel is Apple Pay's dependence on near field communications [NFC] technology, which transmits data over the inch or so between the iPhone and an NFC receiver connected to the store's payment processing system....Yes, more smart phone owners are finding that their handsets are a convenient payment device, with 30 percent using them to make online purchases and 24 percent to pay bills. But so far only 17 percent use their smart phone to pay for store purchases, according to a recent Federal Reserve study, and if that's to grow, mobile wallet providers will have to break out of the NFC [near-field communications] prison." Of the four mobile virtual wallet service providers, only Loop Wallet is not dependent on NFC technology.
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