For years, companies have been talking about replacing
credit cards with smartphones to pay for goods. But consumers have been
slow to play along.
That could change on Monday when Apple unveils its Apple Pay
program to an audience of over 10 million iPhone 6 and 6 Plus owners.
Apple Pay will also work with the company's new iPads — the
Air 2 and Mini 3, which will be released Friday — but only for in-app
purchases. To pay at retail, you'll need the new phones.
Left out is the network of over 500 million iPhones sold
since 2007, but Apple doesn't mind — it wants to sell new phones and
tablets and hopes its new mobile payments system will get consumers excited to
upgrade.
The iconic firm has more than 220,000 retail locations that
will accept payment on the new iPhones. Major payment networks Visa, MasterCard
and American Express and more than 500 banks are on board. Retailers include
such biggies as McDonald's, Macy's, Chevron gas stations, Walgreens and Panera
Bread.
Apple touts ease of use: Instead of fumbling through a
wallet for a credit card, just pull out the phone or tablet. There's also
security — no second hands like waiters, valets or other parties will
have access to your credit card information.
How to get started with Apple Pay?
• On Monday, update to iOS8.1, the new version of Apple's
mobile operating system, via the software update tab in the settings section of
your iPhone. The update will allow the new phones to work with Apple Pay.
• On the iPad or iPhone, open Passbook, the so far
little-used app that first debuted in 2013 to store tickets, coupons and the
like. You can add your credit card or iTunes debit info to the app by using the
camera on the Apple device, and scanning your card.
• Look for a retailer that works with Apple Pay to give
it a try on the iPhone 6.
Beyond the 220,000 retail locations, apps like Airbnb,
Groupon, Lyft and Uber are also working with Apple on their apps to accept
payment via the phone and tablet.
• To pay, hold down the TouchID fingerprint sensor on
the Apple device and point it at the Apple Pay reader. At home with the iPad,
just use your fingerprint instead of a password.
What happens if the phone or tablet is lost? Does all your
banking and credit info go with it? Not if you're quick to act.
Apple touts using its Find My iPhone app, where from a
computer you can put the device into "lost" mode and suspend Apple
Pay.
Apple consumers tend to be such huge fans of the company
that they often to rush in and try new offerings on the first days — and
inevitably bugs pop up and Apple has to scramble to make quick fixes.
So should folks even bother trying Apple Pay next week?
Veteran Apple analyst Tim Bajarin of Creative Strategies
thinks it's a safe bet to give it a shot.
"I don't think Apple would release this if the privacy
and security issue was not solid," he says. "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."
And while Apple's network of 10 million new iPhone owners is
a sliver of its total 500 million plus iPhone audience, Bajarin thinks the
audience will greatly grow before the end of the year.
He estimates that Apple, which is launching Apple Pay only
in the U.S. so far, will have sold 60 million new iPhone 6 and 6 Pluses by the
end of the year. Half of the new sales will be in the U.S., and "that
would mean that about 30 million of these NFC-based phones would be capable of
using Apple Pay this year," says Bajarin.
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