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Why Apple timed things perfectly with the launch of Apple Pay

After years of annual rumors that each successive iPhone would feature NFC, there was understandable skepticism when the rumor rolled around again this year for the iPhone 6. It was looking like Apple might have put all its short-range communication eggs in one basket with Bluetooth LE.

Instead, of course, the iPhone 6 and 6 Plus got NFC as the mechanism for Apple’s contactless payment service, Apple PayPando suggests that the company’s timing may not be entire coincidental.

While U.S. banks have so far ignored the more secure chip-and-pin cards used in Europe, sticking doggedly to magnetic strips and signatures, all that will be changing next year. As of October 2015, banks are switching to chip-based cards – and that means merchants will need to upgrade their payment terminals.

You can still get chip-reading terminals without NFC, but it’s likely that the vast majority of stores will opt to go contactless at the same time. Which means that instead of the 220,000 places you can use contactless payment today, there will be much closer to nine million outlets by this time next year – and you’ll be able to pay with your iPhone 6 at any of them.

U.S. card issuers are already pushing Apple Pay, MasterCard running a full-page ad in today’s New York Times (via Business Insider).

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Comments

  1. lellis2k - 10 years ago

    Meanwhile in the UK, everywhere already has chip and pin terminals, hardly any of which are NFC capable, even fewer compatible with Apple’s token-based system. I see a slow roll out taking years :(

    • Ben Lovejoy - 10 years ago

      Where in the UK are you, Lellis? Here in London, they are everywhere. The token-based system is the same as the one being promoted by Visa, and I suspect that will simply be a firmware update to existing terminals.

      • BenRadUK - 10 years ago

        I for one sincerely hope you are right Ben…this service couldn’t come sooner for us Londoners as life here is FAST and I wanna tap and go when I am buying my Xmas pressies!

      • lellis2k - 10 years ago

        Up north in Yorkshire, most people up here still pay in shillings. We’re waiting for Apple to bring out the iTelegraph ;)

      • Ben Lovejoy - 10 years ago

        :-D

      • degraevesofie - 10 years ago

        “I suspect that will simply be a firmware update to existing terminals”

        I’ve been told (not by an expert though) that it doesn’t even need that. Apparently Apple Pay appears as a new card kind and the terminals’ software is already wired to dynamically accept new card kinds (which are validated on the back end). So each transaction is essentially a “new card” in a sense.

    • metalhaze - 10 years ago

      It’s a good thing the UK is tiny. It will take much less time.

    • Maciej Trybiło - 10 years ago

      In the UK ApplePay is not such a big deal. A lot of people have contactless cards and you can pay up to 20 quid just waving the card. That’s most of the purchases you make. For instance, introducing Apple Pay to outlets like Starbucks or Subway would make zero difference here.

      Watching the “current state of affairs” video during the keynote took me back at least 7 years. This technology is solving mostly American problems.

      • We have contactless cards in Canada, too. However, we’re limited to $50 (about 20 quid). Then there’s the pesky problem of having more than one NFC card in your wallet. If you have one great, tap the whole wallet – but otherwise you have to find the right card and tap it. Still far from ideal. I don’t know about you, but I’d like to avoid carrying a wallet altogether. The only thing to stop me once Apple Pay is popular is my ID, so knowing my government, it’ll be 14 to 25 years until IDs can be used in conjunction with NFC.

        Now to get to your Starbucks or Subway comment in a more direct manner. I don’t know if you paid attention to the Panera Bread app, talked about during the keynote. They are allowing customers to order and pay for their food without queueing. This allows Starbucks and Subway to take that cashier off till and put them on making sandwiches or drinks. The whole process makes serving customers speedier. On a busy Monday morning where getting a Starbucks takes 20 mins – with the staff hustling – as Starbucks is so incredibly popular here; I’d love to open the app from a block or two away. Tap on one of my preset favourite drinks, tap on a breakfast sandwich, Touch ID and then walk into the Starbucks to here a barista call out my order and name! Same goes for Subway – currently one ‘artist’ makes your sandwich start to finish with an app you could have stations like bread and meat, cheese and toasting; veg/sauce/salt, wrapping and pickup. It’ll make the whole process even faster. Both of these companies lose customers every day from people who decided it not worth their time to wait in line. This will allow them to make more money. All companies love that.

  2. jakept - 10 years ago

    A similar thing happened in Australia over a year ago, although the move started earlier. Now the vast majority of stores have NFC readers, even small local businesses, and the standard issue cards for most, if not all, major banks are NFC enabled. Samsung has even been running a “Made for Australia” campaign that promotes its compatibility with this payment system. Apple Pay will take off here big-time once they get the banks on-board.

  3. Bruno Fernandes (@Linkb8) - 10 years ago

    The roll-out will be as fast as the banks want to make it, the stores don’t have much say in the matter. Chip and PIN terminals became ubiquitous in Canada practically over night. The switch over to NFC capable terminals in the US will be equally instantaneous.

    In the UK and other places that already have CHIP/PIN terminals without NFC, it all depends again on how much money the banks want to front for new equipment. CHIP/PIN is already very secure, so there isn’t the same incentive as there was when switching from magstripe-only readers. I’d still bet for relatively quick changeover once the situation in other parts of the world has been demonstrated to work very well and that critical mass of devices is knocking at the door.

    • I remember in Canada, NFC terminals started before CHIP/PIN. They originally launched at ESSO and Shell gas stations. They gave customers a dongle and account. Since banks weren’t issuing NFC cards yet. Customers attached a gift card or credit card to the dongle and then could use that to pay instantly. These machines worked without being attached to Card terminals altogether. These could be add on solutions that are very cheap.

      Side note: From what I understand, as the terminals in Canada have CHIP/PIN ~and~ Magnetic strip within the same terminal, ours will also be changed in October 2015 as Canadian banks will no longer be supporting magnetic strip cards. Up until this point, we’ve been keeping them in order to support American travellers and lazy old people who refuse to call the bank and activate their CHIP/PIN cards that come in the mail. The reasoning behind the new machines is that they’ll be more secure, as people cannot put skimming devices in them.

  4. danbridgland - 10 years ago

    It perpetually puzzles me as to why Apple is always so short sighted, heavily focusing on their own back yard at every major release. It defies convention to target first phase proving ground at your single biggest territory. Better to go for smaller territories to prove a product, then ramp up quickly with lessons learnt.

    • clarkberryman - 10 years ago

      You mean like nobody else done? Is that what you call Samsung’s including a fingerprint reader AFTER Apple did it, proving grounds?

      • herb02135go - 10 years ago

        Samsung has NFC already.
        And a larger screen, great battery life, multi-tasking and many other features that you are still drooling over.

        Oh yea, it also has a smart watch.

        Who’s copying who?

        Welcome to the 21st century, Apple fans!

      • mdelvecchio99 - 10 years ago

        @herb – NFC is basically only the protocol used, it is not the feature. Samsung phones dont do cryptograms & tokens, thats the feature — http://bankinnovation.net/2014/09/heres-how-the-security-behind-apple-pay-will-really-work/.

        SS battery life is only due to the ginormous size of the handsets. apple is matching that. SS watch was released early as a “me first!” product only to beat apple’s long-rumored plans. it sucks.

    • PMZanetti - 10 years ago

      …says a cranky international. Apple is a US company. New things start in the US.

    • chrisl84 - 10 years ago

      Youre puzzled because you dont know how to operate a billion dollar company. Did McDonalds open 50,000 restaurants over the globe on day one or did they start in a small town and grow the concept over time? I sure hope Apple never names you as a VP…..

    • airmanchairman - 10 years ago

      On the contrary, the US needs this technology shift much more than Europe, Australasia or the Far East, having been stuck with the magnetic stripe and signature payments for decades, with its attendant massive vulnerability to fraud.

      It will also allow the US to leap-frog the other parts of the world and lead the way in payment convenience and security in one fell swoop.

      • herb02135go - 10 years ago

        No, the US will roll things out when it will increase profits, consumer desire/security be dammed.

        This is why other countries lead the US in innovation, even though the Americans like to think they are #1.

      • mdelvecchio99 - 10 years ago

        what innovation, specifically? cuz as i see it the US came up with: electricity, light bulbs, automobiles, aviation, personal computers, hollywood, etc.. pretty big stuff. what are we missing out on now?

  5. Mark Wolinski - 10 years ago

    Just to clarify a few points in this article, the Oct 15 ’15 date is a switching of responsibility for fraud, it is not a hard launch date for the banks to switch to Chip payment methods (in fact, it’s questionable if many banks will even have chip cards out by then).

    Second, and more important, the US is NOT going to Chip and Pin. They are going to Chip and Sign. The cards that are being issued by banks these days will still require you to sign a receipt. Here is a page from Citibank explaining the technology: https://www.citi.com/credit-cards/template.do?ID=chip-technology-wchp

    Given that, Apple Pay looks like a much better experience. Hopefully all merchants will accept it in the near future so I can avoid having a credit card on me at all times.

    • Ben Lovejoy - 10 years ago

      I understand that chip-and-PIN is only one implementation of EMV, but it would seem crazy for US banks not to adopt it.

      The date is indeed that by which merchants will be responsible for fraud if they don’t use EMV terminals, but I’d be reasonably confident that’s because most banks expect the system to be in place by then.

      • Mark Wolinski - 10 years ago

        That’s the US for you, we don’t believe in doing what everyone else is in the world is doing. For those of us who travel internationally, it’s a pain.

  6. Dil Ribeiro - 10 years ago

    Here in Brazil, we’ve been using chip and pin terminals for a long time. Most of the terminals have the NFC symbol on it, I do hope all it takes is a simple firmware update. But I’m positive Apple Pay will take a LOOOONG time to get here.

  7. Taste_of_Apple - 10 years ago

    They definitely will see more success than their competitions’ past efforts.

    • herb02135go - 10 years ago

      My S5 has NFC, which is use often.

      I hope you use it as much as I have been.

      Welcome to the 21st century, Apple fans!

      • jhulgan - 10 years ago

        Early adopter wants a cookie?

      • Taste_of_Apple - 10 years ago

        I’ve had NFC before I had the iPhone and honestly never used it once. iPhone with NFC is going to be used more since they have a great system in place to make people want to use it.

      • mdelvecchio99 - 10 years ago

        your S5 does NOT have cryptograms and bank-issed tokens, substituted for actual credit card numbers. thus, youd still be exposed in Target-style data breaches. AP users will not be. so sorry.

        NFC is just the protocol used to transmit the innovation. educate yourself here:

        http://bankinnovation.net/2014/09/heres-how-the-security-behind-apple-pay-will-really-work/

  8. Gabriel Hutchinson - 10 years ago

    Australia has had contactless “pay wave” units for a couple years now. I live in a small beach town of 4000 people on the south east coast and all the business have it. I’m surprised the US is behind on this.

Author

Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!


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