How Apple Pay Could Change the Buying Experience

by Don Reisinger

Apple said that it won’t make Apple Pay available until October. One reason it wasn’t available when Apple launched its new iPhone 6 smartphones is because the company wants to get the technology right. However, delaying the launch might also give Apple more time to explain to potential partners how they can benefit from the mobile payment solution.

Touch ID—Apple’s fingerprint sensor built into the iPhone 5S, iPhone 6 and iPhone 6 Plus—is required to make a purchase. Users point the device close to a payment kiosk and then use their fingerprints to confirm their intent to purchase. Apple argues that its Touch ID platform will make transactions more secure.

While the iPhone 5S might have one component needed for Apple Pay—Touch ID—the device doesn’t have the other necessary element. Built into the iPhone 6 and iPhone 6 Plus is a near-field communication chip that communicates with payment kiosks. Since the iPhone 5S does not come with that chip, it will not work with Apple Pay.

Apple Pay will work with a wide range of applications, including Disney Store, Groupon, Uber, Target, Starbucks and, of course, Apple’s own retail program. While Apple has said that more apps will be added over time, the company has already done a solid job of bringing app makers into the fold. Hopefully, more developers will join in over time.

One of the nice things about Apple Pay is its flexibility. The service works with Visa, MasterCard and American Express. Apple says it has also partnered with several banks—including Bank of America, Capital One and Chase—to ensure their credit cards are also compatible with the service, regardless of the credit company behind them.

Apple has gone a long way toward ensuring secure transactions. Whenever a purchase is made, Apple Pay creates a unique payment ID and hides all personally identifiable information from the retailer. All Apple and the retailer see are that unique identifier and the amount. No card information or personal information is ever shared, effectively sidestepping recent issues of cardholders having their information stolen when retailers get hacked.

Following that, Apple has made a stern commitment to all consumers: No one—not even the government—will be able to see what was purchased with Apple Pay. Recently, the FBI spoke out against that, saying it paves the way for improper use of Apple Pay and it could shield criminals. So far, Apple hasn’t budged from its position, and it’s making those in the law enforcement community awfully concerned.

There have been some questions over whether debit cards will be accepted with Apple Pay. According to the company’s site, debit cards offered through several banks, including Bank of America and Citi, will be accepted. Over time, other banks, including USAA and PNC, will also support Apple Pay. Local banks, at least for now, appear to be out of the loop.

At launch, Apple Pay will work at 220,000 retail locations, the company has confirmed. Apple Pay will work at McDonald’s, Macy’s, Sephora, Staples and many other retailers. While the list of participating retailers isn’t exhaustive, it’s a good start.

So, what’s next for Apple Pay? According to the company, much more. Apple says that it’s working hard to bring on more retailers and banks and will continue to bring developers into the fold so they can offer the payment option to their users. Apple Pay is in its infancy, but Apple claims that many companies are excited to join the program.