Sunday, June 12, 2016

Apple Pay on the Rise: Credit Cards Doomed?

I think the use of Apple Pay will quickly and greatly expand at retail, I think the credit card industry will, after its decades of poor management, be totally shaken up.

As a consumer, I just tried using Apply Pay at retail. It was fast and efficient. In contrast, the use of the new chip technology on credit cards in the US is incredibly messed up. It's slow, inconvenient, and does not greatly increase security.  The chip would have been a big step forward if it was implemented with additional security, say a PIN. But instead, the great expense of switching to chip-based technologies does not make sense there are not enough increases in security.

What's wrong with the US credit card system?

The the US credit card system keep relying on signatures. It's an expensive technology (all those touch screens etc) and does not really improve security. A credit card system in which your picture is taken for large pictures would help crack down on fraud.  A credit card system with a PIN would greatly increase security. And while the chip is a step forward over the magnetic stripes, they didn't require (as they do in Europe) a switch to mobile terminals so that customers are never separated from their credit card.

The US credit card system keeps getting more expensive. Of course, the consumer pays these costs but does not see them.  Seen all those ads about credit cards giving you 1%, 2%, even 5% and 10% back? Who do you think pays for this? The credit card companies just charge the increased fees to the merchants who, in turn, have to increase costs to cover the transaction costs of these credit cards.

The use of an Apply Pay-like system greatly increases security and at this point, the costs to merchants are lower and the convenience to consumers is lower.

"Apple Pay is a mobile payment and digital wallet service by AppleInc. that lets users make payments using the iPhone 6, 6 Plus, and later, Apple Watch-compatible devices (iPhone 5 and later models), iPad Air 2, iPad Pro and iPad Mini 3 and later."

4 comments:

Jestep said...

I'll just speak on the side of our aggregate observation, apple pay, android, samsung, or whatever other mobile payments are going absolutely nowhere. We're monitoring several thousand customers that accept these in very tech-savvy places where initial adoption rates should be higher than anywhere else, and at best it's an entirely forced novelty service. It probably sounds crazy, but mobile payment growth in the form of these digital wallet systems are completely dead. There was a lot of initial interest but there's really no consumer demand for them. I'm not going to argue that the implementation of EMV in the US is more or less a disaster, but so far there's absolutely no indication that mobile payments are even close to the answer to the problems with EMV.

Johne said...

I was about to use Apple Pay but saw that it was hooked to the wrong credit card. I went to settings, to Apple Pay, simply added a second credit card and that made it the default. Very impressive!

Johne said...

I would agree that the Google pay PayPal at retail have been a disaster but Apple Pay seems to have a different sort of momentum.

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