Apple’s “Spring Forward” keynote launched a whole lot of new set of shiny Macbooks and pricey Apple watches, but the biggest payoff from its new Apple Pay system is right around the corner.
Since Apple announced Apple Pay last September, they’ve experienced quite a boom of users, stating that one million credit cards were activated on Apple Pay in first 72 hours alone For comparison Google Wallet, which has been around since 2011, failed to gain mainstream attention for the first few years of its life. Monday’s keynote address adds to that success, boasting that Apple Pay was now available through 2,500 different banks, and could be used in over 700,000 retail locations.
But though Apple could ensure Apple Pay adopters had their side of technology—putting the near field communication (NFC) chip in the iPhone 6—the biggest hurdle has always been to get retailers to adopt the new payment method. Luckily they may be getting some help from the credit card companies later this year, as Kyle S. Crossley and Andrew J. Ferren note in a post for Retail Law Advisor:
By Q4 2015, Apple Pay and Google Wallet are expected to receive a fortuitous bump in the number of retailers equipped with NFC checkout devices, all because of something called EMV. EMV technology is the combined effort of Europay, MasterCard and Visa (hence, EMV) to increase payment card security by installing small chips within the actual card, which you may have already seen on your own recently-received cards. JCB, American Express, China UnionPay, and Discover have all joined the initiative. On October 1, 2015, credit card issuers will shift fraud liability away from U.S. merchants that implement EMV, thereby incentivizing retailers to invest in NFC checkout devices. Fortunately for Apple and Google, the shift to EMV also ensures that the NFC infrastructure necessary for mobile payment will become widely adopted in the U.S. Because EMV is already used throughout most of the world, for the growing legions of Apple Pay and Google Wallet users, the world will soon truly be at their fingertips.
It’s a win-win-win for all parties involved, as Apple Pay and Google Wallet will be easier for consumers to adopt, retailers get an incentive to implement a new system with more assurance that it will last, and the credit card companies gain some protection against the ever-present and increasingly costly data breaches.
So why haven’t EMV cards been adopted before if there’s so much good that can come out of them? There were many issues complicating the shift from the current cards with 1960s magnetic strip technology, according to Eric Packel of the Data Privacy Monitor:
Some of it is a little bit of a “chicken or the egg” scenario. Credit card companies may be waiting on retailers to make the required POS equipment upgrades to be able to use EMV cards. On the other hand, some retailers may be waiting for credit card companies to start generally issuing EMV cards before investing in new equipment.
Also, an EMV card can cost about $3.00 per card, compared to about $.75 for the current magnetic stripe cards. With billions of payment cards issued in the U.S., there may not be sufficient economic incentives to force a quick change-over to EMV.
But now that a costly hurdle to more far-reaching Apple Pay and Google Wallet has been removed, the companies can focus on their ever-expanding empires, with Apple announcing that Kickstarter, Etsy, GameStop, and more had jumped on the bandwagon in light of their keynote press conference. As mentioned above Apple has seemingly been getting a leg-up on Google since they launched last year, and that could be from their extra step security system. As James Crossley notes in an interview with LXBN TV:
Yes, there will always be some level of concern for data breach. But I think the consensus is, among the industry, that [both] Google Wallet and Apple Pay are a step up in security. What that means between the two is that though each of them require an extra level of encryption—or decryption, depending on how you look at it—Apple Pay carries an additional level of tech savvy for someone who’s hoping to gain access to data.
…Apple Pay has the ability to create a token that replaces the need to store actual credit card data on an iPhone. So what it will do is exchange a token that mimics a credit card with a merchant. The merchant will then interact with the credit card network to decrypt the token so that they get the credit card information, and they get their payment. What’s unique about Apple Pay is that it does not require any access to the Internet or the cell network in order to be used. Google Wallet does…because it stores the credit card information on its servers—much like your bank, or credit card companies currently.
So when people talk about security and points of access that are potential sources of data breach, Google is essentially adding one point of access to the list. So if you trust your bank you should feel comfortable trusting Google with your credit card…the same way you trust the big retailers who’ve have had security breaches…for that reason people tend to think of Apple as being slightly more secure.
Of course like Crossley and Ferren mentioned above, the U.S. has been lagging in regard to transitioning with the rest of the world, so this shift will be huge beyond mobile payment roll outs. In fact, it could change the way a lot of tech works, as noted in an article for Digital Trends:
The era of NFC is just beginning. Expect to see NFC technology in more places. Wearable tech is an obvious starting point. NFC has been embeded in jewelry that could be used to access private data. Some manufactures are making temporary tattoos with embedded NFC chips that’ll unlock your phone. Creepier still is the xNT implant, a $99 kit that provides everything you need (including a syringe) to implant an NFC chip into your body.
Several major cities, including San Francisco, now offer payment options through parking meters. Cities like London and Manchester will send you a humorous call from a historical figure when you scan the NFC tab of the corresponding statue. You can purchase NFC tags that’ll allow users to preform tasks like enable Wi-Fi, or set phone settings, in a matter of seconds.
Come October, widespread adoption of this technology could open a lot of doors for new gadgets—and Apple Pay and Google Wallet will be there more than ever to help you acquire them.