Apple Pay has now officially launched in the UK, allowing iPhone 6, iPhone 6 Plus and Apple Watch users to make contact-less payments using their devices. First released in October 2014 as part of the iOS 8.1 update, the Apple Pay system enables contact-less payments via embedded NFC (near-field communication) chips included in both the iPhone 6 and iPhone 6 Plus.
The large push from Apple to develop the Apple Pay system is symbolic of the growing amount of interest from the large multinational giants such as Apple and Google into financial technology, as a sector which still has significant potential for innovation.
Despite offering some extra convenient features for users as they attempt to “forever change the way all of us buy things” according to CEO Tim Cook, the system has suffered from a number of setbacks which are difficult barriers to Apple Pay becoming yet another Apple success story.
Since its launch, Apple Pay has experienced a number of issues with payment delays and double charges. Many users have had problems with merchants being totally unprepared for the new systems, which essentially takes up the time that should have been saved by using Apple Pay!
Users have also experienced issues when using Apple Pay on the London Underground since the UK launch, as many customers have been subject to doubled charges due to them owning both an iPhone 6 and Apple Watch; if both devices are detected then two default tickets may wind up being purchased without the users knowledge. Errors such as this could have a significant effect on uptake of the new systems and are likely to further limit the companies plans to revolutionise payments.
Besides, the large number of frauds undermined the trust of the app’s users. According to the statistics, only a small percentage (about 6%) of iPhone 6 owners prefers to use Apple Pay.
Bitcoin and blockchain technology have also experienced a surge of interest, as potential applications for the innovative distributed ledger system are investigated by multinational banks and financial services organisations alike.
Both Bitcoin and Apple Pay bring much needed modernisation to payment systems, by implementing innovative technologies to revolutionise the way we transfer value between us. Mobile payment systems are likely to become more and more important as our online lives takeover the long established paradigms of cash and card transactions.
The technology for contact-less payments has been functional for some time now, as NFC chips included on bank cards allow users to pay by simply tapping their card on the POS Terminal, cutting out the need to enter pin numbers for smaller transactions.
Bitcoin can also provide a means of contactless payment, through the use of a growing number of powerful mobile wallets which utilise QR codes to save time lost entering long wallet addresses character by character.
The long existing norm of using physical cash for smaller purchases and credit cards for larger transactions, has been revolutionised by modern financial systems. The ease of use of credit and debit cards mean that nowadays many of us will rarely use paper money, Apple Pay will attempt to remove the need for the physical card, instead opting to encapsulate the information it carries into the ‘Passbook’ app.
The app can then transmit the necessary details securely to the merchant via the NFC chip included in compatible devices. With the expansion of online shopping, the need to use physical cash and cards will be even less significant; the potential for innovation is huge and there is a significant opportunity to revolutionise payments. Bitcoin provides a more concrete way of achieving this; it’s architecture mean that double payments are incredibly unlikely without the user explicitly choosing to send funds twice.
The decentralised nature of the cryptocurrency can also provide users with a level of security which is simply unmatched by Apple Pay; despite reassurances that credit card details are not actually transmitted to the merchant, but tokenised such that the relevant account can be charged without transmission of any irrelevant information, Apple Pay still provides a point wherein account/card details are transmitted via a wireless signal. The cryptographic form taken by Bitcoin means that the computational power required to tamper with transactions effectively renders it an impossibility.
On Monday, American Express announced it will enable its Corporate Card Members to make purchases with Apple devices, thus becoming the first credit card issuer to support the feature. The company activated Apple Pay for OPEN Small Business Cards and Consumer Cards in 2014.
More than 400 banks and financial institutions have already added Apple Pay, while the main problem lies with signing up merchants, most of which are unable to offer Near Field communication to process payments.
Apple Pay is not the only provider of mobile payments services, as Samsung Pay is also planned to be launched this month. Unlike Samsung Pay and Apple Pay, which are available on the latest versions of mobile devices, Google is developing a universal payment app, called Android Pay. Developed by a consortium of US retail companies Merchant Consumer Exchange, mobile payment system CurrentC is a key competitor to these services.
If compared with Bitcoin, Apple Pay and other mobile payments providers can’t solve the financial issues. Digital currency payments offer multiple benefits for both merchants and customers. While the activation of Apple Pay and similar services require merchants to acquire NFC-enabled payment terminals, the use of bitcoin doesn’t force merchants to spend money on additional infrastructure. Besides, digital currency implies lower transaction fees and allows merchants to receive money a few days after the transaction instead of waiting about a month.
To summarise, Apple Pay is an interesting application of established NFC technology to digitise our credit cards, whereas Bitcoin is a completely new way of transferring value from one person to another.
The blockchain utilised in Bitcoin is an incredibly innovative methodology to track value in a way that is secure, straightforward and decentralised. It truly has the potential to revolutionise the way we all buy things; the Bitcoin network and the growing number of intermediaries providing users access to it, provide a way to send money internationally for next to nothing – with significantly lower fees than existing options available.
This is great news for merchants, as usually they wind up paying for the privilege of charging customers and Bitcoin has the power to eliminate this drain on profits. Ultimately this means savings for consumers too; why not become an ambassador for Bitcoin today and get involved with the real financial revolution by using bitcoins for as many payments as you can!