I’m over 40 (okay, 50), so my habits are well entrenched. I’m not exactly a Luddite, mind you, but frankly I never understood all the buzz I kept hearing about mobile wallet benefits — the act of magically waving your smartphone in front of a sensor to pay for everything from a bag of groceries to your next Mai Tai. I mean that’s what cash, checks and credit cards were invented for, right? How difficult, after all, is it to reach for your wallet, pull out your card and swipe it? How lazy are we getting as a nation?
Then my attitude did a complete 180-degree turn on my trip to Maui from which I just returned (I still have some black sand between my toes to prove it).
Nobody in my family wanted to hit Kaanapali Beach one last time before flying back home, so I intrepidly decided to attack the surf by myself — a lukewarm act of rugged independence to let my family know that Dad’s no sissy. Other than my board shorts, I left our hotel room without a shirt, shoes, phone and wallet. I felt a little uneasy about leaving the last items behind — my phone and wallet — but I figured they were safer there than lying exposed on the beach to prying eyes.
Realizing my mistake
After throwing my body headlong into the waves, I started wrestling with a few crazy thoughts that only seem to surface when you’re alone in deep blue water. What if a Great White comes too close to shore? What if a jellyfish wraps its tentacles around me? What if I’m dashed against the rocks by a rogue wave? What if I stroke out, who would be able to identify me?
How stupid was I to leave my wallet in back in the room. I could turn into shark bait, and nobody would ever know!
Of course, none of those mental meanderings came to pass, but I would have felt a whole lot better had I been wearing some sort of portable smart device like an Apple Watch that was linked to my smartphone and, by extension, an electronic wallet holding my I.D. and financial information.
That was my big Maui moment. I realized there was a need for such a product. Alone in the surf, I didn’t just see the wave, I decided it was time to catch it before it left me behind.
My resolve only strengthened as I trudged back to my hotel room. Once poolside, I walked by scores of lounge chairs fanned out around the pool filled with young and old alike, on their smartphones or tablets. Everyone was electronically leashed.
Reluctance for consumers to use smart wallets
Although smart wallets, such as Google Wallet, have been around for several years now, their widespread acceptance has been tepid at best. But fortunately, for you and me, that is all about to change now that Apple is set to introduce Apple Pay, its new mobile payments service later in the month. Whether you’re standing knee-deep in the Pacific Ocean or in line at your local Rite-Aid, it will create a universal change on how you choose to pay for and connect to everything. Just because you won’t have a physical wallet attached to your backside, you won’t be made to feel as if you’re isolated from your money or your personal identification ever again.
This wave is breaking over us now, thanks to Apple, which, through Apple Pay, will offer us a better platform, improved security and greater convenience for accessing everything vital to our lives. Let’s look at each of these three tips of the spear a little more closely.
Apple isn’t reinventing the wheel
Apple has always had an innate sense of timing. It’s inbred in its culture. The company has never felt it had to be the first, only the best.
As a case in point, look back only a decade or so to the Apple iPod. It wasn’t the only MP3 player on the market, nor was it the first, but it was the sleekest and coolest and became the most ubiquitous. It soon changed how we listened to music and how we paid for it.
Similarly, the smartphone had been existence for 15 years before Apple introduced its version, the iPhone, in 2007, its large touchscreen among a host of consumer-friendly features that helped it leap past its rivals on the way to making Apple the most profitable publicly traded company in the world.
Indeed, Apple is hardly sailing into uncharted or virgin seas. When online shoppers early on expressed their need for an alternative payment system to credit cards or mailing checks or cash, PayPal jumped into this underserved market and got online retailers to support its payment system. When eBay purchased PayPal in 2002, the sale further legitimized online payment methods.
Apple Pay service will leverage information that is already known and stored on iTunes, which boasts more than 800 million accounts. If you purchase the iPhone 6 or 6 Plus, the service is already available to the user based on his or her stored information.
Apple seeks global domination
Some 800 million accounts is a fleet worthy enough to fuel any launch, but again Apple isn’t looking just to leave the harbor, it’s seeking global domination. With Apple now helming the mobile wallet project, the three major payment networks, American Express, MasterCard and Visa, many of the nation’s most popular banks including Bank of America®, Capital One Bank, Chase, Citi and Wells Fargo, and a host of retailers such as Bloomingdale’s, Disney Store and Walt Disney World Resort, Duane Reade, Macy’s, McDonald’s, Sephora, Staples, Subway, Walgreens and Whole Foods Market all have agreed to come aboard and support Apple Pay.
Apple Watch will also work at the over 220,000 merchant locations across the United States that have contactless payment enabled. Apple Pay is also able to make purchases through apps in the App Store℠.
Don’t compare Apple Pay to Google Wallet
Indisputably, with its immense financial resources and expanding global reach, Apple is the captain of its domain. Unlike Google Wallet, it is both the maker of the software and the hardware, so its systems will seamlessly talk to one another and, more important, to the consumer. It is one of the few, if not the only one, to create the perfect ecosystem for such a bold venture that will change how we connect and communicate with one another and the world.
And when I say “we,” I truly mean everybody. Wherever you look, from skyscrapers to the cardboard boxes and tents of Skid Row, you’ll find people on their smartphones. You may not own shoes or a shirt, but you’ll own a smartphone.
Calming a storm of security concerns
As for the introduction of Apple Pay, Apple’s timing couldn’t be better. Lately it seems few Americans have been untouched by security breaches at major retailers like Home Depot and Target, which have led to compromised credit card data. If ever there were a time for a more secure payment system, that time is now.
Unlike Facebook or Google, which retains your personal data to sell you more products and services (that’s creepy), Apple Pay will be more or less faceless or opaque. It doesn’t care to see what you buy. It won’t know what you bought, where you bought it or how much you paid for it.
That goes for merchants too. When you use Apple Pay in a store, restaurant or other merchants, cashiers will no longer see your name, credit card number or security code. That’s because with Apple Pay, the actual card numbers are neither stored on the device nor on Apple servers. Instead, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element on your iPhone or Apple Watch. Each transaction is authorized with a one-time unique number using your Device Account Number and instead of using the security code from the back of your card, Apple Pay creates a dynamic security code to securely validate each transaction.
Moreover, the combination of biometric authentication (by the Touch ID fingerprint system), near-field communication and GPS location data makes for a payment process that is vastly superior to any current protection offered by credit cards.
This is the reason merchants, who see a large percentage of their interchange fees go to cover fraudulent transactions, are so supportive of Apple Pay. If Apple Pay succeeds, as I believe it will, merchants will save money.
Convenience has its advantages
Convenience is the reason you’ll see everyone from accountants to zebra handlers using Apple Pay. If you have the iPhone 6 or 6 plus, you can simply add your credit or debit card on file from your iTunes Store® account. Then all you pretty much have to do is wave your phone, like a magic wand, in front of the merchant’s payment scanning device to execute payment.
Apple Pay will also work with the newly announced Apple Watch™, extending Apple Pay to over 200 million owners of iPhone 5, iPhone 5c and iPhone 5s worldwide.
For the consumer, how all this money and information moves around occurs in the background. There’s no program to enroll in or sign up for. Again, the participating merchant will equally like the system because all the back-end work is done by the payment network (think Visa or MasterCard) and the issuing bank (the bank issuing the card and authorizing its use by the holder).
Furthermore, iPhone apps users can pay for physical goods and services including apparel, electronics, health and beauty products, tickets and more with the touch of a finger, so there’s no need to manually fill out lengthy account forms or repeatedly type in shipping and billing information. For example, quickly order grill accessories for a backyard barbecue from the Target app, easily request a ride with Uber without having to create an account first, or avoid the lunch line by using Rapid Pick-Up and paying ahead in the Panera Bread app. Simply make your selection and when ready to buy, use Apple Pay to complete the transaction.
Why I’m sold on mobile wallet benefits
Apple is promising me an ease of use and promise of security that are unprecedented. In the past, I’ve bought various iterations of its products, and see no reason to end the romance now. Apple might be my new Big Brother, but we simply have too much shared history to ignore, and that includes Apple already having all my credit card information through my iTunes account.
But if the truth be told, I hated that feeling of being all alone in the water. When that last wave washed over me, it finally awakened me to the possibility of being linked to my banking and personal information no matter where I am, whether I’m zip-lining through a Maui rainforest or snorkeling for sea turtles.
I’m okay living with an electronic leash. It can be a dangerous and lonely world out there, so as much as I want to be ruggedly independent, being that old man in the sea with my three-day vacation beard, I’m not completely comfortable with cutting the cord to civilization.
I just hope and pray that the Apple Watch, which will link to Apple Pay and my mobile wallet, comes in a waterproof model.