Posted by Baydr Yadallee

One of the biggest announcements a couple of months ago alongside the iPhone 6 and Apple Watch was the announcement of Apple Pay, a fully-fledged mobile payment system based on existing technology albeit with some added security measures thrown in (hello Touch ID). Apple finally took the dive and added NFC to their latest generation of smartphone hardware, making it compatible with many POS card terminals. I won’t go in to the detail of how Apple Pay works in-store, but if you’re interested I’d recommend this excellent article over at ArsTechnica for a good overview of how mobile payments work.

So why were people so excited about this particular Apple announcement when there have been competing mobile wallets such as Google Wallet available for a number of years? People have high expectations of Apple and regularly throw around the term “game changer” after previous successes with the digital music store, iTunes, and later bringing smartphones to the masses with the launch of the iPhone. So does Apple have another hit on their hands?

The in-store experience

It’s hard to pass too much judgement as Apple Pay hasn’t launched in the UK yet, and isn’t due to until some point in 2015, so I haven’t had the chance to experience it hands-on. Based on the reviews from the US launch, where Apple has seemingly succeeded is by doing what they’re good at: marrying up the software and hardware into a simple and intuitive user experience. Adding your card is straightforward; to pay you just hold your phone to the card terminal and it prompts to verify your purchase with your fingerprint. Obviously there’s a bit more to the UI, but at its heart it has been designed to be simple and easy to use. So far, so good, but the reality in the US is that only around 4% of the 6 million merchants currently accept Apple Pay; so although mobile payments may have arrived, it won’t be replacing your physical wallet for at least a few years.

For developers

The reality for mobile app developers today with Apple Pay may be somewhat different. Developers can start using Apple Pay in their apps to allow users to pay for physical goods and services like tickets, appliances, food orders, etc. Note the difference for virtual goods that still requires In-App Purchase (IAP) with the unfortunate 70/30 revenue split. Handily, Apple Pay doesn’t cost anything in this instance as you’re still paying your payment gateway for the privilege. The way this will work is, there will be an Apple Pay button in the app on the transaction screen which presents you with a summary of your order before you confirm using Touch ID. You’d would assume that this would improve in-app conversion, however I’ve yet to see any conclusive evidence of this from app developers.

So it seems most of us will probably experience Apple Pay in an iOS app before we get the chance to try it in-store. While I look forward to the (near) future of being to pay with my digital wallet, I think Apple Pay will make more of an impact in the online payments arena initially, with users getting used to the method, setting us up nicely for the time retailers catch-up with the POS payment infrastructure.

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