It is unclear whether Henry Ford ever uttered the famous saying: "If I had asked people what they wanted, they would have said faster horses." But even if he did not say those words, the statement still proves true. Innovation is not making something we already have better; innovation is creating something that has never been created before.
Apple has become one of the most well-known, innovative companies of this century. From iPods and iPhones to the recently debuted Apple Watch, the company has stayed ahead of its competition by being the innovators of personal technology.
Apple's newest example of innovation is Apple Pay — a mobile payments system. By utilizing near-field communication (NFC), users will be able to hold up the iPhone 6 to an NFC-accepted point-of-sale system and the payment will be processed. Apple Pay is going to shake up the way business is done.
Since NFC payments are a completely new concept, people are hesitant. Will it be easier for hackers to steal my information? Does my bank allow this? Will retailers accept this form of payment? Is it worth the time to set it up?
Well, Apple was prepared for the hesitation.
Will it be easier for hackers to steal my information?
With all of the security breaches at some of the largest nationwide retailers, like the recent breach at Home Depot that mimics the one at Target last year, consumers are concerned about the security of retailers' point-of-sale (POS) systems.
Apple Pay is not another way for hackers to steal information. Rather, it's a way to solve the existing problem. Currently, when a payment is processed, the POS system copies and stores the credit card information. The information is then sent to the bank to verify and complete the transaction.
The information stored by the company and POS system includes the card number, and the cardholder's name and address — everything you want to keep private. When hackers break into one of these POS systems, they have access to all that private information.
Apple Pay has eliminated this vulnerability. NFC-based transactions have complex security features. Instead of transferring the card number, the Apple Pay system generates a unique 16-digit code for each transaction. Once the code is used, it becomes useless. So, instead of hackers gaining access to your credit card number, they gain access to a useless 16-digit code.
Does my bank allow it?
According to an article on Mashable, "NFC started showing up in phones in China and France as early as 2006 and in the Nexus S in 2010, but even after Google unveiled Google Wallet in 2011, consumers and partners didn't flock to the new technology."
Why did previous attempts fail? Many think it's because those efforts did not have the backing that Apple has.
The only way to make NFC payments work is to partner with the major credit card companies and banks. Apple has formed alliances with Visa, Mastercard and American Express, as well as with Bank of America, Capital One, JPMorgan Chase, Citigroup, Wells Fargo and several other banks. These banks represent 83 percent of credit card purchases, according to an article on Wired.
Will retailers accept this form of payment?
But Apple Pay is still useless if retailers cannot accept the payment. So who is prepared to accept Apple Pay? Right now, few stores have the technology.
Starting off, Apple Pay will be accepted by Babies R Us, Bloomingdales, Disney Stores, Nike, Petco, Macy's, McDonald's, Toys R Us, Subway, Whole Foods and a few others. These limited stores make up only 2.4 percent of the approximately 8 million merchants in the United States — the rest lack technology.
The minimal number of initial stores might cause some alarm for those interested in using Apple Pay, but Apple representatives are confident that the number will increase rapidly. The reason for their confidence? By October 2015, retailers are required to accept EMV, which is a new type of card technology meant to reduce fraud.
Since most retailers do not have the technology to accept EMV currently, they must upgrade their technology within the next year to comply with the law. Why not make NFC part of the upgrade since they already have to purchase new equipment and technology?
Is it worth the time to set it up?
Setting up your iPhone 6 to be ready for Apple Pay is extremely simple. You can use the iSight camera on the phone to capture the card information, you can manually type in the information or you can import the credit card information directly from iTunes.
It might not be useful at most places immediately, but once Apple Pay gets up and going, you will be right there ready to use your phone as payment.
Despite its critics, Apple has transformed our lives in more ways than one. Apple Pay is the most recent innovation, and it could also become the most influential. Apple Pay will change the way we pay for items, as well as change the cybersecurity landscape for retailers.
When dealing with money and transactions, there is never a 100 percent guarantee that your money and information is safe. However, with Apple Pay, you are giving yourself a higher probability that the information is safe.
As Apple Pay expands to other banks and retailers, our shopping experiences will change at the checkout counter and maybe our peace of mind will return.
