Why Apple Pay Will Boost Mobile Payments

Apple did more than announce its new, bigger iPhone 6 and super sized iPhone 6 Plus and much-anticipated Apple Watch earlier this month.

It also showcased its new mobile payment system, Apple Pay. Though payment via mobile devices using near-field communication (NFC) is not a new concept, Apple went beyond the norm.

Rather than just add an NFC radio to its new phones and watch and call it a day, it engineered a complete payment system and network. It's now ready for launch with its other new products, which is very likely why Apple Pay will succeed where other NFC payment systems have failed.

Leave it to Apple

In developing the Apple Pay system, Apple took three major steps towards forward:

  • It is partnering with existing credit card companies to deal with fragmentation in the market
  • It simplified the payment process
  • It extended the system to the Internet of Things (IoT) with the Apple Watch

It's this more thoughtful approach that will likely aid in Apple's long-term success and overall acceptance of its payment system.

Apple was smart while developing Apple Pay. It worked with major credit card companies instead of trying to compete with them and lined up a number of major retail chains so there will already be a network of more than 220,000 locations accepting Apple Pay once it launches.

By getting major credit cards like Visa and MasterCard on board — and working with standards they were already developing — as well as luring some major brick-and-mortar retailers like McDonalds, Subway, Target and Whole Foods, Apple has changed the paradigm. It has developed a network of places where its 800 million or so customers can potentially use Apple Pay.

Another issue Apple was able to address with Apple Pay is ease of use. Current NFC payment systems require a user to enter a personal identification number (PIN) before touching his device to the payment station. But Apple Pay avoids that by letting the users authorize their purchase with the Apple touch ID system that is built into the phone.

Applying the Apple eye for design and streamlined user interface to the Apple Pay system to create a more friendly and enjoyable customer experience will set Apple Pay apart. It'll prove easier and faster than the other NFC systems that require a PIN to authorize each individual purchase.

Bigger than Mobile Payments

What I see as the biggest step forward for Apple and its payment system is the extension of NFC payments into the IoT. Apple is allowing the new Apple Watch to act as payment devices: Just touch the watch to the payment station and the purchase is made.

The Apple Watch uses the iPhone as its gateway to the Internet and, as such, it has access to the Apple Pay application on the iPhone. That allows customers to use wearable tech to make a payment without ever having to take a phone out of a pocket, further simplifying the payment process.

Overall, Apple Pay takes many steps in the right direction for NFC payments, which other systems have not been able to pull together in the past.

Apple collaborated smartly to develop a network that their iPhone customers can use once the system launches — and with record-breaking iPhone 6 sales of more than more than 10 million in just three days after the launch on Sept. 19, it has a strong customer base in place.

Apple has simplified the experience for the user and incorporated the Internet of Things by brining Apple Pay to the Apple Watch.

Given the way Apple has been able to impact markets in the past — think the disruption to music with the iPod, for instance — it stands a very good chance of making a similar impact on digital payments.

Title image by Christopher Edwards  (Flickr) via a CC BY-NC-SA 2.0 license.