Will Apple Pay bring an end to cash payments? Not so fast

For centuries, we’ve been paying for our goods and services by handing over physical forms of money to the cashier. But in today’s modern society, there are many different methods of payment available to us – and the launch of Apple Pay has just added to our list of choices.

Matthew Hunt, CEO at Apadmi Enterprise, the enterprise app development division of the UK’s leading mobile app developer, Apadmi, investigates how the new technology works and discusses how it could change the way we complete transactions.

With more than 250,000 shops across the UK accepting Apple Pay as a method of payment, it’s not surprising that the launch has been eagerly anticipated. Users with an iPhone 6, iPhone 6 Plus or Apple Watch can make simple and quick contactless payments with their device.

> See also: Why banks are realising their legacy technology must evolve or die

The device is held against a card reader, which detects the near-field communication (NFC) chip embedded within the phone or watch. This will then open up the Apple Pay app and, by touching the biometric sensor in the home button on the phone or by double clicking the side button on the watch, the payment will be accepted.

How will Apple Pay change how we pay?

There are already a number of different ways to pay for things, apart from just handing over a handful of coins or a bank note. For decades, businesses have been allowing customers to pay for purchases by inserting their card into a chip and pin device, reducing the need to carry around wallets full of cash.

More recently, the introduction of contactless card payments have simplified this process even further in that customers no longer have to enter their pin code and can quickly hold their card over the machine.

And according to Barclays, one in six customers will choose to shop elsewhere if they cannot pay with a card, highlighting just how popular card payments have become.

Our wallets are now predominantly filled with a variety of different credit and debit cards and a decreasing amount of cash. But this may all be about to change with the introduction of Apple Pay. The idea behind it is to completely eliminate the need to carry around a wallet at all.

All of those credit cards that are filling up your wallet can quickly be added and digitally stored in the Passbook app, so they are ready to use anytime you need to make a payment with Apple Pay.

Users can simply add the card that is already associated with their iTunes account, and new cards can also be registered in a few straightforward steps.

Then it just takes one simple touch of the device and the transaction is complete – this means the end to counting out change, battling to pull your credit or debit card out of that tight slot in your wallet or having to remember your pin code.

Is Apple Pay secure?

Security is one of the biggest concerns wherever money and personal information is concerned. Fraud and cyber crime is a real threat and people are becoming more aware that they need to protect themselves against such attacks – particularly when it comes to sharing personal information digitally and online. Having said this, we use the contactless capability of our credit and debit cards without giving much thought to how the data will be stored.

Apple Pay actually offers a more secure way of paying than contactless cards. This is because the card details are not stored on the app or even on the Apple servers.

A unique Device Account Number is generated and encrypted for each new card. This is then added to a certified chip within the device called the Secure Element, which stores all of the payment information safely. Even if the device is lost or stolen, Apple Pay can be remotely suspended or wiped using Find My iPhone.

Are there any drawbacks?

As with all new and evolving technology, there are a few things that still need ironing out. One of the main issues that would prevent Apple Pay from completely replacing the wallet is the fact that payments are limited to £20 per transaction.

Of course this is a security benefit, but as with contactless cards, this purchase method is ruled out when making payments over £20.

Further to this, not all stores accept Apple Pay yet and again this means that consumers can’t just rely on it to make purchases. Shops are required to have the specialised NFC reader to allow customers to use Apple Pay, and considering that some places like bars are yet to even accept card payments, it’s likely to be some time before everywhere has one of the readers.

Adoption amongst businesses will increase once they see why the technology is beneficial and how it will improve the customer service experience – such as by making it quicker and easier to complete transactions.

How can it be improved?

Perhaps the most obvious way to improve the payment service would be to increase the £20 limit to allow for larger transactions to be made. Without doing this, there is little chance that Apple Pay will be able to replace the traditional methods of payments such as cash or credit cards.

> See also: Should UK banks be sweating about the arrival of Apple Pay?

This then leads on to the need for greater focus on how secure the app is to encourage people to trust the technology and be reassured that their bank details are safe. If people don’t feel comfortable using the software then they are unlikely to make big purchases with it anyway. It would also be extremely useful if developers looked into ways to make the device’s battery life last longer. It would be highly inconvenient if you go out with just your iPhone and no wallet and the battery runs out.

Personally, I think widespread adoption is still quite a way off yet. The technology is still in its infancy and it needs to prove itself as a secure method of payment and a way to enhance the purchasing process. Early adopters are likely to be those who are enthusiastic about new technology and perhaps the younger generation.

For the everyday consumer, it’s going to be more about changing their payment habits and will take longer for people to get their head around how the technology works – people are still trying to get used to paying with their contactless card.

It is also worth bearing in mind that users are limited to those who own the latest models of Apple’s product. This alone may slow down adoption, as those who have not yet upgraded to the newest versions won’t be able to use it.

Having said this, it will be interesting to see how people begin to engage with Apple Pay and how popular it becomes with customers. There is potential for it to become a mainstream method of payment and the security aspect is a real selling point. 

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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