Apple iPhone 6 to feature mobile wallet NFC payment system
New contactless mobile payments service will put Apple in competition with PayPal, Google, US mobile networks and banks
Juliette Garside and Alex Hern in London
theguardian.com, Tuesday 9 September 2014 14.26 EDT
Eddy Cue introduces ApplePay. Photograph: Apple
Apple has introduced a mobile wallet in the iPhone 6, joining a growing army of banks and technology companies aiming to wean the world away from cash.
Owners of the latest version of the world’s best selling mobile phone will be able to pay for purchases at tills and eventually journeys on buses and tube trains by touching their phones on wireless readers.
Experts are already predicting that Apple’s new iPhones could revolutionise the way we shop in the same way that the Californian computing group has already transformed the music, mobile and personal computing industries.
Tim Cook said: “We’re gonna start by focusing on payments. Payments is a huge business. Every day between credit and debit we spend 12 billion dollars. That’s over 4 trillion dollars a year, and that’s just in the United States … 200 million transactions a day. That’s 200 million times we scramble for our credit cards and go through what is a fairly antiquated process.”
Users will scan and add a card to their iPhone. In an effort to allay security fears, Apple said the Find My iPhone app will be able to suspend all payments from a device if it is lost. Apple will not know how much is spent on an item and the cashier will not see the security code.
The service, known as Apple Pay, launches in the US with American Express, MasterCard and Visa, along with banks representing 83% of all credit card payments by volume. McDonald’s will have compatible tills, along with Disney’s theme parks and the Whole Foods Market. Developers will be able to build apps for Apple pay using an API available from next month.
The technology, which Apple has been developing since 2009 when it filed the first of an estimated 23 patents on wireless payments, has already reached a tipping point in the UK, where most current account holders already own touch to pay cards.
Chains including sandwich maker Pret a Manger, coffee shop group Starbucks and many newsagents already accept these so called NFC (near field communication) payments. They allow devices, each equipped with an NFC chip and placed within a few centimetres of each other to exchange data.
The path to creating a mass market substitute for cash is littered with failed attempts by some of the best known names in banking and technology. Released in the US in 2011, the Google Wallet limps on but a planned expansion to the UK was cancelled. After vowing to change the way the world buys stuff, Twitter’s founder, Jack Dorsey, withdrew his Square Wallet from the Apple and Google app stores, while Visa’s V.me, which launched in Europe last winter, and was rebranded Visa Checkout this summer and has barely registered at the tills.
With more than 800m iCloud accounts in use, of which almost all have a credit card attached for payments for apps, movies and TV shows, the move means Apple could rapidly become one of the most powerful forces in mobile payments, where it will contend with Google’s Wallet scheme, similar efforts from PayPal and another run by US carriers that has recently been rebranded as Softcard. Neither Google Wallet nor Softcard has achieved significant uptake among users or retailers – and all eyes will be on Apple to see whether its initiative stalls, or takes off.
ApplePay will also work online, and, of course, in apps on the company’s devices.
Apple will have to reassure customers worried over last week’s iCloud hack, in which celebrities saw private pictures taken on iPhones spread on web chatrooms, that their mobile details will be safe.
Anthony Duffy, a director of retail banking at Fujitsu, said: “With the launch of the iPhone 6 and its payment capability, Apple has once again sent out a challenge to the industry – and this time it has the payments market in its sights. This sector, already undergoing massive evolution as Internet and mobile payments take hold and new providers target perceived opportunities, will be revolutionised if Apple’s mobile wallet grabs the public attention.
However, the credit card details associated with an iCloud account cannot be copied from it, even when accessed using the owner’s email and password.
“We don’t store the credit card number, and we don’t give it to the merchant … each time you pay, we use a one-time payment number along with a dynamic security code,” explained Eddy Cue, the company’s vice president in charge of software.
In a nod to rival Google, Cue also boasted of the service’s focus on privacy. “Security is at the core of Pay, but so is privacy. We’re not in the business of collecting your data.” Apple won’t store where users spend their money, what they bought, or “any other details”, Cue said.
Attacking the dominance of credit cards, Apple’s CEO, Tim Cook, said that “we’re totally reliant on the exposed numbers and the outdated and vulnerable magnetic stripe interface. It’s no wonder that people have dreamed of replacing these for years, but they’ve all failed.” He blamed the prior failures on attempts to build “self-centred” business models.
According to eMarketer, US “mobile proximity” (NFC phone) payments amounted to $745.96m (£462m) in 2012, rising to $1.6bn in 2013. That however compares to total retail transactions worth trillions of dollars. In 2013, 11.16 million Americans made NFC-based mobile phone payments, amounting to just 8% of US smartphone users, though that marked a 57.1% increase from 7.1 million in 2012.
That means that for the whole of 2013, each user spent about $143 in total – up from $105 in 2012. Figures from Visa Europe indicate that across Europe there are 90m contactless cards in circulation, 1.5m contactless terminals, and that the average contactless purchase is worth €9.31 (£7.45). The number of transactions is still growing: they were worth 20m in the whole of May 2014 in the UK, according to Visa.
Apple’s system will enable people to make payments using the contactless payment technology already built into most British credit and debit cards and the Oyster travel payment system. It has had slow take up in the US, where comparatively few tills and cards are NFC-equipped – although tens of millions of Android smartphones are.
NFC systems used in the UK let users pay for goods up to £20 without having to swipe, insert the card into a reader or enter a pin. Instead they tap the card against a suitably equipped reader and the purchase is confirmed.
Having previously eschewed NFC, Apple has included it in its newest products – creating a new way to encourage people with iCloud accounts to transact on the credit cards registered there. Before Tuesday’s event, news site NFC World pointed to 23 NFC-related patents that Apple has amassed since 2009, the year before Google introduced the first NFC-enabled Android phone, the Nexus S.
Worldwide mobile payments surpassed $235bn in 2013, according to Gartner, a research company.
“We expect global mobile transaction volume and value to average 35% annual growth between 2012 and 2017, and we are forecasting a market worth $721bn with more than 450 million users by 2017,” said Sandy Shen, research director at Gartner.
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• This article was amended on 10 September 2014 to update figures for the number of contactless cards and payment terminals in circulation.
Wendy’s Joins Burger King With New Mobile Payment iPhone App
John Brownlee (12:20 pm PDT, Mar 23rd)
It looks like paying for burgers using your iPhone is the next big trend in fast food.
Following Burger King’s announcement last week that it would be releasing a dedicate mobile app, Wendy’s has followed suit, unveiling their own iPhone-based payment app that will allow you to pay for Big Bacon Classics at any of Wendy’s 5,800 locations.
The app works a bit differently than Burger King’s app, which gave you a Passbook-style gift card that could be scanned on your iPhone. Rather, Wendy’s system allows users to launch the app to pull up a six digit number that can be given to a cashier for payment. Wendy’s said it’s a more suitable system for drive thrus, where you don’t want to have to give a server your iPhone from your car window.
Like Burger King’s app, the Wendy’s app functions as a virtual gift card, which you can top up or reload with money as you see fit. As of right now, though, there are no discounts or loyalty perks for users who use the app instead of paying in cash.
You can download the My Wendy’s app on the App Store for free here.