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Has Apple underwhelmed with Apple Pay?

The concept of mobile payments, mobile money, and mobile wallets has been around for some time and many major companies have had a go at it. Some progress has been made but with so many stakeholders needing to collaborate in order to provide a coherent, comprehensive useful mobile wallet ecosystem, a strong catalyst has been lacking – is the launch of Apple Pay to be it?

Apple has now plunged into the world of mobile payments, lending legitimacy to a field

Apple Pay in action

Has Apple underwhelmed with Apple Pay?

that has dashed the hopes of some of the biggest technology companies.

The company’s new Apple Pay service, integrated with the new iPhones and a digital watch, is designed to allow users to buy merchandise, scan tickets and other actions by waving their mobile device in front of a reader using NFC (Near Field Communication) technology.

By moving into the mobile payments game with Apple Pay, Apple could well provide just the push needed for mobile payments, something CEO Tim Cook was keen to stress at the launch. Cook rightly pointed out that user experience is key – it has to be easier to pay with your phone than otherwise – and the Touch ID fingerprint reader introduced in the 5s is key to this. Apple’s belated introduction of NFC, after months of speculation, has also been confirmed, allowing people to pay by just tapping the phone at a reader.

Apple said it hoped to speed up the checkout process and, ultimately, to replace physical wallets for consumers.

“Apple Pay will forever change the way we buy,” boasted Chief Executive Tim Cook as he announced the service at a presentation in Cupertino, near the company’s headquarters. Apple also may have found a new revenue stream in rolling out the payments service – however, their share price did drop post announcement.

The card-issuing banks have agreed to pay a per-transaction fee to Apple to be included on the phone, according to people familiar with the situation. While the amount of the fee couldn’t be determined, banks believe that cost will be offset by the number of transactions that consumers make on the phone.

Apple is promising more-secure transactions than the plastic cards most consumers use today. That will be welcome news to consumers grown weary from a series of high-profile breaches at Target, Home Depot and others that have potentially exposed tens of millions of accounts.

The introduction of one-time payment numbers and dynamic security codes seem to be key to providing the security reassurance that has also hampered efforts to get the mobile wallets going thus far, with people worrying about putting all their eggs in one basket. It seems that the card number is not even stored on the phone.

Apple will require a thumbprint scan on its new iPhone 6 to make the tap-and-go payments – meaning a stolen device can’t be used for a shopping spree. It wasn’t immediately clear how Apple would authenticate payments on the smartwatch.

Back in 2010 Apple looked a serious danger to take over the world. Sales of the iPhone had gone exponential and a mere three years after disrupting the mobile phone market beyond recognition, Apple launched the first iPad and did a similar number on personal computing. The iPhone 4 was an impressive upgrade to an established hit and the expectation was that Apple would set the tone for the rest of the technology industry on an annual basis.

But a year later all we got was the iPhone 4S, which was a nice phone, but essentially a minor upgrade on the 4, with Siri thrown in for good measure. That’s fine, we thought, even Apple can’t set the world on fire every year. Wait until it goes up a whole new number to 5 – that’s when the real innovation will kick in. A year later and the anticipated spec upgrades were accompanied by a slightly larger screen, and that was it, again somewhat of an anti-climax.

The buzz leading up to last year’s launch was that Apple was going to respond to explosive smartphone demand in developing markets by introducing a cheaper version of the iPhone. In the end it repackaged the year-old device in colourful plastic, called it the 5c, and didn’t reduce its price at all. The fingerprint reader in the 5s was nice, but once more evolutionary rather than revolutionary.

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