Apple Pay is a contactless payment system, using your iPhone (or Apple Watch) to pay for low value purchases instead of a contactless credit/debit card. By waving your phone at a till or payment point, the sale value is taken from the card you have registered to your iTunes account.
The service is currently accepted by around 250,000 merchants in the US, out of six million, and is set to launch later this year in the UK and Europe.
The fundamental benefit of services like Apple Pay is convenience, not only for the customer but for business owners with a high store footfall or regular lunchtime rush. Assuming the purchase is of low value (the limit for contactless payment is £20), the need to dig out a card or carry out a time consuming transaction is completely removed. A few minutes of saved time for each payment can make day-to-day business management duties that bit easier to get through.
While businesses must initially invest to replace or upgrade their payment system or PDQ machine in store, there are tangible benefits in getting ahead of the game and making the customer experience easier.
For customers, the prospect of paying for their daily coffee or a haircut on their phone is new, but not alien. Even so, retailers should prepare for questions from customers who aren’t aware of the system’s security measures.
Card numbers aren’t stored on the device or by Apple, but are instead assigned a unique number which is encrypted and stored securely within the iPhone or Apple Watch. If a phone is lost or stolen, payments can be suspended remotely.
We expect larger players and chains to sign up to Apple Pay relatively quickly, but it remains to be seen whether independent stores will bite the bullet immediately. Until results and positive customer feedback roll in from larger brands, and independents feel they can fully weigh up the benefits, uptake may be a slow burn.
Once systems like this are commonplace for smaller businesses, we’ll be looking to build the technology into our apps.
Nick Barnett is CEO of online app builder Appsme.
Check out our Apple Pay hub for everything that businesses need to know