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Should you prepare your small business to take payments through Apple Pay?

October 23, 2014

This week marks the launch of Apple’s latest attempt at changing the way we interact with technology, as Apple Pay, the company’s version of mobile contactless technology, debuts in the US.

Whilst this launch is currently limited to the US, the chances are if all goes to plan it will launch in the UK within the next 6 months.

But what exactly is Apple Pay? And is it going to affect your small business?

There’s a slim chance it could be another fad which flops, but it could also be the system which pushes widespread adoption of mobile payments. So the question is, as a small business, should you look into preparing for Apple Pay?

What is Apple Pay?

It’s nothing new, that’s the first thing to note. Apple Pay is simply Apple’s version of a mobile, contactless payment system, just like Google Wallet (which launched in 2011) or the contactless process which many debit and credit card providers now use.

Using the new iPhone 6 or iPhone 6 Plus, users will be able to use the payment details stored in their Passbook to pay for purchases at the point of the service in a retail outlet.

According to Apple, you just hold your iPhone up to the card reader and hold the fingerprint TouchID sensor, and using NFC (near-field communication) technology, payment details are transmitted privately and securely straight to your bank.

Why is Apple Pay different?

As a general idea, Apple Pay isn’t particularly different to what’s come before, but it’s important to remember that this is Apple. They might not reinvent the wheel, but they have a tendency to revolutionise the user experience and promote widespread adoption of technologies. This is the key for Apple Pay.

There are three major reasons why Apple Pay is different to other mobile payment systems;

Apple iPhones are hugely popular

With over 500 million iPhones sold to date, Apple Pay could quite easily herald the arrival of widespread adoption of mobile payment systems.

Apple are known as trendsetters, with many users eager to adopt the latest technology they offer, so it won’t be surprising if the number of Apple Pay transactions explodes in the next year.

It’s extremely secure and private

Apple have touted the security features of Apple Pay as one of the main reasons why customer and merchants will choose to use it.

Referring to current debit and credit card payments as ‘antiquated’ and ‘open to fraudulent use’, Apple Pay features an extremely high level of encryption, with no data stored or seen by Apple servers or individual merchants. Using a token system, this prevents the opportunities for fraud or hacking, as payments are sent straight to the user’s bank for processing.

Banks in the US have announced their full support of Apple Pay because of this, and with the TouchID on iPhones required to authorise payments, it could go a long way in reassuring customers of the security of mobile payments.

It’s simple to use

With an emphasis on the user experience, Apple have made mobile payments smooth and effortless. Instead of needing to wake up your phone and enter pin numbers, like other mobile payment systems, you just hold your phone to the card reader with your finger on the TouchID, and payment is made.

The integration and synchronicity through your iPhone is another reason why Apple Pay could stand above the competition. Passbook will store all card details securely, and many users will already have their card details on file in their iTunes account (over 800 million cards are registered with Apple).

You’ll be able to use the same account to pay in store, online and for in app purchases, with the single iPhone and Passbook account.

Should small businesses prepare for Apple Pay?

Right now, there’s no set date on when Apple Pay will come to the UK, but Visa have announced it will support payments via the system in 2015. If everything goes to plan in the US it won’t be long before it’s available here.

That means that now is a good time to be thinking about whether it would be beneficial to your small business to prepare for Apple Pay.

On the plus side:

  • There are over 40 million contactless payment cards in daily use in the UK. The technology is slowly being adopted and Apply Pay could drive a huge increase in this. If you have tech savvy customers, they will come to expect the option to check with Apple Pay sooner or later.
  • It will offer your customers another way to pay, and could set you apart from your competitors, as you stay on the cutting edge of technology.
  • It can help you look like a larger, more established business, and could reassure customers about the security of transactions made with you.
  • And whilst upgrades to your POS machines might be required for you to accept Apple Pay, it’s worth noting that all card readers are required to have an EMV chip for security reasons by October 2015, so now could be the perfect time to upgrade and prepare for iPhone payments.

However, there are a few negative points to consider:

  • Whilst Apple don’t currently charge any fees for processing payments with Apple Pay, this may change in the future, especially if banks stop sharing associated costs with Apple. What these fees might be, remains to be seen.
  • The UK currently has a contactless spend limit of £20. If you provide higher value goods or services, it may not be worth investing in Apple Pay. This limit could rise though, if Apple Pay is as secure as it claims.
  • Apple Pay might not be as stable or smooth as it claims. So far, Apple Pay has only be demonstrated by Apple themselves. Previous Apple products have had well publicised issues and problems when tried in ‘real life’ by consumers. This may well be the case with Apple Pay, and there’s no guarantee the system could cope with massive, early adoption.
  • Adoption might not be widespread. Any niggling issues like unstable transactions or database crashes will greatly hinder Apple Pay’s popularity, particularly because card details and personal information are at stake. A minor security glitch could see trust in Apple Pay all but disappear. Whilst the chances of this happening are extremely slim, it could still happen.

The best advice is to wait and see how Apple Pay is adopted in the US. If it’s as successful as experts are predicting it could be, then the chances are it will be popular here too, and will change the way customers buy products and services.

If that is the case, it’d be wise to consider accepting Apple Pay in your business, to stay on top of the game and offer the best choice of payment options to your customers. But don’t buy too soon, just in case Apple Pay isn’t the success Apple is hoping it will be.

About the author

This article was written by ByteStart’s regular web and technology contributor, Nick Pinson. He is a Director at iWeb Solutions, an e-commerce website design agency based in Staffordshire.

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