Merchant Advance Blog

Blog Article: Apple Pay Keeps The Cards Away: The iPhone 6’s Business Gambit

These days, news of an upcoming Apple press conference is treated with the excitement and reverence often associated with a red-carpet Hollywood event: tech sites and blogs buzz for weeks prior to the date, speculation flies, and crowds of reporters ask not “who are you wearing?” but “what are you showing?”

Of course, yesterday’s announcement did not forget to add a dose of the hip and glamorous: in addition to being live-streamed around the world, it featured appearances by stadium rock titans (and previously established Apple fan-boys) U2. On this day, CEO Tim Cook heralded the unveiling of the iPhone 6 in both regular and super-sized editions. It’s not too hard for me to remember the first time I ever saw an original iPhone – standing in a line at a gaming convention in Seattle, as a fellow linemate pulled it out to check his email like it was no big deal. A hushed crowd of inquisitive geeks gathered around, as though he had produced rare spices brought from the New World.  Six generations later, the iPhone is nearly ubiquitous among not just the tech-savvy, but their kids and their grandparents as well. In this newest incarnation, it promises certain features that could have a significant effect on small businesses.

Apple Pay

The new iPhone boasts plenty of reasons to make tech fans swoon: it’s thinner! It’s faster! It’s lighter! The screen is bigger! The battery life… might not be quite as suspect! And yet, perhaps the most interesting of the new features is called Apple Pay – a service using short-range radio communication (not unlike Bluetooth or the “tap to pay” feature common to newer major credit and debit cards) to transmit payment information from account data entered into a user’s phone to a Point of Sale pin-pad. The theory behind this idea points to a certain set of trendy thinking about how we pay for things every day – one in which speed and security are the top priorities both for businesses and consumers. In his address, Cook called out traditional magnetic stripe/PIN card systems, labelling them “outdated and vulnerable.” He has some fairly good press in his corner, given the recent struggles faced by national-level retailers like Target in the wake of mass PIN-theft hacks perpetrated against consumers.

Device Integration

We’ve already seen – and blogged about – the work done by payment processors like Square to facilitate the integration of small business commerce with easy-to-use technology. Apple Pay looks like it ought to work a bit like Square in reverse: rather than allowing small or independent businesses to process payments anywhere they could bring a phone, it allows customers to pay for items with a single device that is already likely to be close at hand. There are already quite a few mobile payment apps out there – thought not many of these have managed to gain extraordinary amounts of traction (save possibly for PayPal) or to provide a truly integrated, one-tap payment workflow. Only time will tell if Apple Pay has a real shot at improving significantly on the existing model. One point does work strongly in their favour: everyone with an iPhone is extremely likely to also have an iTunes account that is already connected to a major credit card.

Small Business: A Bite of the Apple

At least in the short term, it looks like small business owners may not stand to benefit in world-shattering ways from the introduction of Apple Pay.  You may already be familiar with the ambiguity that strikes when you walk into a retailer whose pin-pad may or may not accept chip transactions. More and more brick-and-mortar stores are popping up with tap card readers, but they are by no means universal – the onus will be on business owners to upgrade to the quicker, integrated payment standard once the iPhone 6 begins to saturate the market. Big businesses will be the first in line to support the new infrastructure: however, given the eagerness of some agile small businesses to quickly adopt alternatives like Square and Bitcoin (I recently bought a great poutine at a BTC-enabled food cart,) it shows that there is a market for smaller, independent retailers who want to embrace new technologies in order to entice tech-adopting shoppers.

 

Do you see the majority of businesses, regardless of size, scaling to accept Apple Pay in the future? Is it time to do away with wallets full of cards? Let us know on social media with the buttons below.

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