On September 9, Apple announced Apple Pay, an easy, secure way to make mobile payments using their latest devices, - the iPhone 6’s and Apple Watch. The reaction to the announcement has been mostly positive: “[F]or now, at least, analysts believe if there is any company to persuade consumers of the mobile wallet’s value, it is Apple.” Same with the payments community: “Well, hello Apple, and welcome to the payments industry. We’ve been holding the door open for you for a long time.”
Apple Pay is embracing a number of industry standards, including NFC (near-field communications) for contact-less payments; Secure Element, a dedicated device chip; and network-based tokenization to protect sensitive financial data. Apple is collaborating with the big credit card networks, several banks and a number of merchants in the development and deployment of Apple Pay. In addition, the company is hoping to stimulate innovation by publishing their APIs so developers can embed Apple Pay services in their apps.
Currently, the digital payments infrastructure is quite fragmented, with different players pursuing different standards. By embracing key industry standards, Apple Pay could encourage their widespread acceptance around the world, and thus help coalesce this fragmented payment ecosystem. In addition, by reaching out to financial institutions, merchants, application developers and others, Apple is helping bring together the different players in the payments ecosystem, something that’s absolutely essential to succeed in such a complex undertaking.