It has been a long time coming for credit cards to go the wayside as technology could make it more possible to pay for things by smartphone. On Oct. 20, Apple released Apple Pay, its new system for purchasing goods through Phones, USA Today reported.
The Apple Pay program will be available for the roughly 10 million iPhone 6 and iPhone 6 Plus users across the world. Additionally, Apple's iPad Air 2 and iPad Mini 3 will feature Apple Pay. However, the tablets will allow only in-app purchases, and to make a retail purchase, users will need the iPhone 6, the source reported.
Major banks backing Apple Pay
Frank Gillett, an analyst for Forrester Research, explained hundreds of banks have jumped on board with Apple's new smartphone payment system, which is extremely necessary for the program to work, The Associated Press reported.
Apple Pay will give consumers even more of an incentive to purchase the new iPhone models over competitors. According to the source, the new phones have a chip that will allow a payment at special terminals at different retail outlets across the nation.
"It's a strategic advance not just because it may be a new revenue source, but because it injects Apple into a whole different value stream," Gillett said, according to the source.
Apple addressing security with credit cards
The timing by Apple is near perfect with the security concerns around credit cards increasing each time a different major security breach is mentioned in the news. Van Baker, an analyst for Gartner, explained that consumers are more hesitant about credit card security than ever, and some U.S. companies are being forced to switch to new chip-based card readers to reduce credit card information theft, the AP reported.
"Consumers are going to have to learn a new way to pay," Baker told the source. "That levels the playing field for new technology."
According to Mac World, the chip is an NFC radio antenna and Apple will include partners such as American Express, Bank of America, Chase, Capital One, Visa, MasterCard, Citi and Wells Fargo.
How Apple Pay works
The system will work simply enough, as users hold their iPhone 6 devices up to a wireless payment terminal near the cash register, and it will only require a touch ID - the exact one consumers use to turn on their iPhone with the home button - to make the purchase, Mac World reported.
Simply put, the user will put the device next to the terminal, whether the phone is off or on, and the terminal will ask for confirmation for the purchase. Once the user selects yes, it will access Apple Pay and show the different credit cards or debit cards included in the user's digital wallet. Once the card is selected, it only takes a touch ID verification to complete the process.
According to Venture Beat, there are an expected 200,000 or more stores that will be using the new wireless system for Apple Pay to work. USA Today reported some people are concerned about Apple's security and how well the program will work.
"I don't think Apple would release this if the privacy and security issue was not solid," said Tim Bajarin, an analyst for Creative Strategies, according to the source. "However, there could be glitches at the point-of-sales terminals during the initial roll-out, although those NFC-based terminals have worked pretty flawlessly so far."
With the stress of wanting a new iPhone 6, consumers should consider personal insurance to protect their smartphones in case their devices are ever stolen, lost or broken. Then, users wouldn't have to succumb to replacing their iPhones with older models without Apple Pay.