How will Apple Pay affect the mobile payment market?

    Today, Apple will introduce Apple Pay, a mobile payment service announced last month. A few days earlier, Apple CEO Tim Cook announced this at an event dedicated to the release of new iPad models and other new products.



    Starting this day, many goods and services can be paid directly from Apple devices by reading payment information from the display of a smartphone or tablet using NFC (Near Field Communication) technology with user authentication through a fingerprint sensor Touch ID. True, this nuance at the entrance eliminates a huge number of users of old iPhone and iPad models (including iPhone 5 and iPad mini 2), dividing the multimillion-dollar army of Apple mobile gadget users into 2 camps.

    However, Apple itself kills two birds with one stone - introduces a powerful payment system, which at the start stage will seriously compete with the leaders of the mobile payments market and stimulate users to purchase new models of their iPhone and iPad.

    Talking about a new service Apple began in September. Since the technology giant from Cupertino announced its intention to enter the mobile payments market with its own payment system, Apple has expressed a desire to cooperate with more than 500 banks and financial institutions, including Bank of America, Citibank, JPMorgan Chase and Wells Fargo.

    Meanwhile, not all the major players in the payment services market took this news with enthusiasm. Some, like Visa, Mastercard and American Express, without hesitation agreed to cooperate with a new player in the market, while others are preparing to confront him. For example, PayPal, which, in order to fully resist Apple Pay, is separated from eBay.

    What do analysts think about Apple Pay, what, in their opinion, does the “apple” corporation have in their chances of conquering a new market for themselves, for which many companies have been fighting for domination for many years, including such serious players as PayPal and Google?

    Most experts who spoke about this believe that the introduction of a new payment system will give the world of digital payments a powerful impetus, and small businesses are encouraged to take a closer look at Apple Pay, as it has every chance of shaping the future of mobile payments.

    Apple's Digital Wallet is essentially a piece of software code activated through a mobile application that provides consumers with access to credit and debit cards, as well as to a bank account, in order to make purchases.

    Starting today, with Apple Pay it will be possible to pay in more than 200,000 outlets. Among the retailers who were among the first to cooperate with the new payment system are McDonald's restaurants, Walgreen pharmacy chain and Target and Macy's department stores.

    “If you want to enter the market and attract a mass consumer, you need to immediately start on a serious scale, which Apple has done,” said James Anderson, vice president of MasterCard.


    IPhone 6 and 6 Plus users will be able to download up to 8 different credit cards to their smartphone, which have a new iPhone 6 will be able to download up to eight different credit cards, in addition, using Apple Pay you can pay for purchases in applications.

    Anderson believes that the last point is especially important for small businesses, as it will allow you to sell their products directly in the application without any intermediaries, which, in addition to obvious convenience, will improve brand positioning.

    An equally important aspect of Apple Pay is the security measures that Apple has applied in its mobile wallet - experts say that payments with Apple Pay will be more secure than with plastic cards. The biometric fingerprint scanner will verify that the payment is made exclusively by the owner of the smartphone. The NFC chip transmits payment information using tokens in encrypted form, and not the cardholder’s bank account information in “plain text”.

    “Innovations related to tokenization and biometric identification make Apple Pay stand out from other market offerings such as the Google Wallet and Softcard,” says Andri Schmidt, TowerGroup Research and Development Director at DAC.


    And although it’s too early to judge the potential of the service before its launch, these advantages can become Apple’s serious trump cards in entering the rapidly growing market of payment systems. Currently, the US e-commerce market is about $ 260 billion, of which $ 115 billion is from mobile sales. However, according to some estimates, these numbers may triple in the next five years.

    Based on materials from Western media

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