Apple Pay Ensures NFC-Powered Mobile Payments Benefit Small Businesses
The most anticipated payment technology in years is expected to launch in mid-October. As a credit card payment processor for small businesses and large enterprises, we are thrilled to support a game-changer that we believe will increasingly shift away from the physical wallet finally bringing mobile payments to the forefront of our industry.
The “George Costanza wallet” ─ over-stuffed and prone to explosion ─ may soon be a thing of the past. Customers will be able to pay for purchases with their iPhones instead.
Industry analysts also expect Apple PayTM to change the landscape by pushing long-sought widespread adoption of mobile payment systems. In a nutshell, if you're a small business, accepting Apple Pay can give you a competitive edge by giving customers a safe, secure and convenient way to pay.
Here are two reasons merchants need to consider Apple Pay.
Apple has the cache to entice its customers to be less dependent on physical wallets. We aren’t just talking about the more than 10 million iPhone 6 models sold last month. In an online survey of 2,305 Business Insider readers, many consumers reported that they would absolutely use Apple Pay ─ with over 58 percent stating that it’s “insanely cool.”
By 2018, mobile proximity payments in the U.S., which include payments made using a phone to make a physical transaction at the point of sale, will reach $118 billion, up from $3.5 billion in 2014, according to eMarketer.
Ultimate success revolves around what customers want ─the inquiry is simply whether Apple Pay is something they are interested in or are likely to use.
Apple Pay aims to increase customer satisfaction by making checkout a unique and incredibly intuitive experience. It also gives customers another way to pay for purchases based on their preferences ─ some consumers, for example, don't want to carry around cash and credit cards, while others just can't live without their iPhones.
To that end, we recommend that merchants make communication with their customers priority number one. The timeframe may be short before the mobile payments becomes an absolute business necessity.
Security and NFC
We are staunch supporters of securing information at all times, and we spend a great deal of time educating our merchants on how to protect business and customer data. With regard to these concerns, Apple Pay is pretty impressive. They have incorporated NFC – aka Near Field Communications ─ in their platform.
I went straight to the source to understand exactly what this technology offers. The following information is directly from www.apple.com.
The new iPhone6 models include a "secure element" chip where credit card information (but not an actual credit card number) is stored as a Device Account Number used for payment processing. Apple verifies the ability to pay with a participating bank. When a customer goes to pay, a dynamic number is issued to the merchant, and it can be used only for that one-time transaction. The merchant doesn't have actual credit card numbers, and Apple doesn't know what was purchased or how much was spent.
So, how does NFC work?
In short, it’s a chip in the phone that talks to payment terminals (NFC readers) – taking the place of physical credit cards at the POS. To complete an in-person transaction, the customer must hold the phone within a couple of inches of the point-of-sale terminal while pressing against the Touch ID fingerprint scanner on the phone.
Apple has partnerships with MasterCard, Visa and American Express, along with leading banks that handle more than 83 percent of U.S. credit card transactions. TSYS Merchant Solutions is excited to support Apple Pay.
Retailers are jumping on board as well. The merchant list includes Macy's, Bloomingdale's, Disney, Walgreens, Staples, McDonald's, ToysRUs and Whole Foods. Apple relies on NFC technology built into the phones and compatible point-of-sale terminals, and says more than 220,000 locations in the U.S. will be able to accept such payments.
There is also a second option for payments ─ In-App transactions with Apple Pay. Check back for a post that will offer further insights on how this secure and easy method of accepting payments will benefit merchants.