Apple Pay has arrived in the US, simplifying point-of-sale transactions into a casual iPhone waft. To use Apple Pay, users require an Apple device with Touch ID and iOS 8.1, a debit or credit card and a finger. Although Apple Pay is not a new idea (NFC technology has been available for some time in contactless bank cards and high-end Android handsets), the Cupertino giant is the first business to wrap that technology into a typically elegant package and distribute it on a large scale.
Apple Pay launches with a variety of retail partners. In the US, Apple wafters are able to buy a Big Mac, Nike trainers, U2’s new album, a Subway sandwich, Apple’s new super-slim iPads, prescription drugs, matcha tea from Whole Foods, rides from Uber and Lyft and whatever they sell in Radio Shack these days. There’s a clear advantage for retailers supporting NFC, which speeds up transactions and increases the amount users spend through a ‘decoupling’ effect. Researchers have found consumers spend more when transactions don’t directly use currency, explaining why credit card bills bloat and casinos use chips. Apple charges each bank a small fee with each transaction, so there is no additional cost to users or retailers beyond the required hardware. Interestingly, despite the additional transaction fee, banks are falling over themselves to be involved in Apple Pay, as a secure solution to widespread credit card fraud.
Apple’s chief of hyperbole, Tim Cook, has been particularly vocal about Apple Pay’s promise of security and anonymity. In transactions, no user-data is passed on to retailers. This is proving to be problematic for Starbucks and Panera Bread, two businesses that have invested heavily in loyalty schemes that rely on collecting user data, which are therefore incompatible with Apple Pay. Apple Pay users can top up their MyStarbucks app account digitally, but will have to resort to using bank cards or cold, hard cash for their Pumpkin Spice Latte.