Apple Pay – evolution or revolution?

Originally posted on Billing Views.

Innovation in payments tends to be evolutionary, rather than revolutionary. The success stories in payments tend to be based on taking what’s already there and making it work better. This approach also happens to be the way Apple has approached technology innovation for its successful product lines.

An Apple move into payments has been much debated over the past few years and this week we have at last seen their play in this market with the announcement of Apple Pay. Much has already been written about Apple Pay but in summary it improves both online and contactless payment experiences by incorporating NFC into the iPhone 6 and 6 Plus, utilising Touch ID and Passbook as a consumer friendly front end plus a secure element to manage the security stuff.

Consumers are better protected than with regular card payments because no consumer data is passed to the merchant – the transaction is handled using one-time security tokens. Improved transaction security is increasingly seen as critical by all parties in the payment chain with the frequency of thefts of customer card data. Removing customer data from the payment process is perhaps the most disruptive element in the whole Apple Pay product.

Even adding cards to Apple Pay is simple – you just take a photo of them.

Will Apple Pay catch the imagination of consumers? A combination of the Apple brand, device compatibility, card scheme support and (in the US at least) bank and merchant support means that it stands a good chance of becoming a mainstream way to pay. But consumers are fickle characters …

And of course Apple Pay works with the Apple Watch (which also extends Apple Pay to the iPhone 5, 5S and 5C).

My biggest disappointment with Apple Pay – it will be US only at launch!