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The inimitable value of Apple Pay and what comes next

Apple Pay brought together everything from Passbook to Touch ID to launch Apple into the mobile transaction business. It was the company's first major new product category since the iPad and its been expanding steadily in the U.S. since October. As a service, Apple Pay is compelling enough that Android owners should consider switching to iPhone. It offers better security, efficiency, and experience for everyone along the chain, from banks to retailers to customers. And it could also be the first of those kinds of services "only Apple" is positioned to provide. Matt Richman:

Google does not control Android enough to create anything truly comparable to Apple Pay. Even if Google were able to add Apple Pay's software components to Android, the company would have to rely on its hardware partners to replicate Touch ID and the secure element and to seamlessly integrate everything together. They're not going to be able to do that for the foreseeable future.So that's the strategic significance of Apple Pay — it's the first time Apple leveraged its strengths to create a highly profitable yet uncopyable service that is destined for success.

Ben Bajarin, writing for Tech.pinions, highlights the value, and how it applies to other services as well:

Apple Pay is a great example of [services innovation]. As I mentioned before, retailers are jumping on board for many reasons but one of the largest is attracting Apple's customers to their stores. Similarly, when we talk to companies looking to support HealthKit and HomeKit, we hear from the services companies like health, security, etc., that they want Apple's customers.

The same way Apple Pay makes for a better transactional service for everyone involved, HealthKit, HomeKit, and CarPlay could make for better healthcare information, home automation, and driving services. (Entertainment and other areas could likewise follow.) Apple won't need to be a data company, appliance manufacturer, or car maker, any more than they need to be a bank, but they'll be able to ensure their customers get better packaged, more accessible, more approachable, and more enjoyable experiences in all those areas.

And that once again raises the value of owning an iPhone.

Rene Ritchie
Rene Ritchie

Rene Ritchie is one of the most respected Apple analysts in the business, reaching a combined audience of over 40 million readers a month. His YouTube channel, Vector, has over 90 thousand subscribers and 14 million views and his podcasts, including Debug, have been downloaded over 20 million times. He also regularly co-hosts MacBreak Weekly for the TWiT network and co-hosted CES Live! and Talk Mobile. Based in Montreal, Rene is a former director of product marketing, web developer, and graphic designer. He's authored several books and appeared on numerous television and radio segments to discuss Apple and the technology industry. When not working, he likes to cook, grapple, and spend time with his friends and family.

26 Comments
  • There is one significant difference between Apple Pay and HealthKit/HomeKit/CarPlay - partner incentive to innovate. Apple Pay beautifully ties together merchant and bank, but these partners explicitly do not want innovation in that base service - they only want stability, and somebody to tie together what they already do. Apple fits in perfectly here. (Yes, merchants are going to want loyalty cards and similar, but those concerns are interior to the merchant, not part of the transaction with the bank.) Home/Health/Car, the incentives are flipped. Not only does the partner want to innovate, they *need* to innovate to differentiate themselves from their competitors. For example, once HomeKit integration is achieved, the only way for Control4 to entice you to buy their product as opposed to Prodigy or Nest is to race to the bottom, price-wise, or to do something the others cannot. That inevitably creates an incentive means to do something HomeKit cannot, or storing data HomeKit does not. There will be an initial rush to Home/Health/Car compatibility, but after that, makers are going to need to "think different" from Apple in order to thrive. If Apple has any weakness w.r.t. partners, it is that they have repeatedly shown they care very little for any incentives that do not directly feed their own. With Apple Pay, the banks' incentives do. With Home/Health/Car, I'm not so sure. Sent from the iMore App
  • "And it could also be the first of those kinds of services "only Apple" is positioned to provide." Except it's not. The reason why Apple Pay is in existence is because of Google Wallet, and other mobile payment services that have been around for quite sometime already. I don't understand why an Android owner would be compelled to switch platforms just because a mobile payment solution is now available even though we've had it for years. Sony Z3, Nexus 5, or Surface Pro 3
  • The interesting thing about Apple Pay, to me, is not the NFC stuff, but the link to Touch ID and the way they securely store cards. Is it enough to switch your primary phone over? Maybe not. But having used both, I like Apple Pay's implementation more than GW.
  • Oddly enough the TouchID security feature will quickly go away for some/most once the Apple watch is released (unless the watch bombs or people don't use it for Apple pay).
  • True, though it's still user-authenticated — you have to authorize the Watch via your phone, and then it'll be active until you take it off your wrist/break skin contact.
  • Things such as Apple Pay are what will continue to drive iPhone sales. The smartphone is not longer just a phone and entertainment device but an "assistant" that enables us to have more control over our lives and our belongings. Years ago my family went on a cruise to the Grand Caymans. A side trip kayaking with a guide took us past a mansion on the beach that was simply stunning to behold. Our guide knew someone who knew the house and it's features. One that amazed me was it had an alarm system with cameras that would notify it's owner of intrusion and allow him to see in real time what was transpiring in the house and surrounding property regardless of where the owner was located. At that time such systems were for the rich only. This past Christmas we bought a iSmart alarm system that does exactly what the system in the Grand Caymans did on sale for just over $100(we didn't get the camera but it's available). My point is that our phones have become and will evolve even more and things that are only pipe dreams or for those with a lot of money, will be affordable to the masses.
  • Sorry, but Apple Pay is not compelling enough to swtich phones. It doesn't work with business cards. I have tried chase business mastercards and visas, and no luck. Citibank business debut card, no luck either. Sorry, but the lack of business card support is big turnoff.
  • Also personal chase mastercards don't work. Discover cards don't work.
  • I know that's something Apple's working on right now. That's the problem with having to interact with outside businesses — some are faster than others. ;)
  • And if they didn't partner, and just allowed the real card number to be transferred, think of the fraud.
    .
    I'm still waiting on my little credit union to enable Apple Pay (it's on the list) but I really hope there is two factor authentication for setup. I really hope some kid at the drive through can't snap a picture of my credit card, enter the CVV and now have my CC in their phone for ApplePay- Is there a phone call to make or an online process to enable a 15 minute window to enter into my phone? I googled this once, I think the result was "Varies by bank".
    .
    Does GW vary from AP's authentication & partnering? Sent from the iMore App
  • Yeah, there's no way anyone can get at your CC information besides you using Apple Pay right now; all that shows up on your screen are the last four digits of the card number, and the sales computer processes a one-time CC number that's not linked to your original CC number.
  • I guess the hackers didn't get your memo.
  • I don't see what the big deal is. So what if your card # gets stolen. I don't know why some people freak out at the thought of it.
    Just call the issuing bank, tell them it was stolen, and have a new one sent to you fedex next day air, and you are not responsible for the charges.
  • My corporate card with BofA works with Apple Pay
  • Tim Cook repeatedly used the term "Android-switchers" during the recent earnings conference call. That trend was mostly due to the larger-screen iPhone 6 series, but there's no doubt that Pay and Watch (as Rene has pointed out elsewhere) will accelerate the rate of Android users switching to the iPhone. I'm not talking about diehard Android users. I'm not even talking about a major shift in market share. All Apple needs to do is shift 5-7% of the Android user base and they will ensure healthy iPhone sales growth for many quarters to come.
  • Why would I go to Apple just for Apple Pay when I already have Google Wallet on my Nexus 5 that I can use anywhere that accepts Apple Pay? Flawed logic. Posted via the iMore App for Android
  • Because Google Wallet isn't Apple Pay. Read the article and the links above. It's like saying "Why would I get an iPhone if I already have a flip phone, walkman, and point-and-shoot". It's not the disparate services but the integrated experience that will give you value :)
  • I read the article and couldn't see a compelling reason to switch because of Apple Pay, and then you insult the commenter by making an outlandish comparison to a flip phone, walkman, and point and shoot. You basically just called them stupid.
  • I expected that but thanks for calling it out :) Posted via the iMore App for Android
  • How is the comparison outlandish? Three disparate services vs. one integrated service.
  • I thought you said in a previous article that integrated services were not that big of a deal when talking about using Google Apps on an iPhone vs using Google apps on Android which is more integrated... Posted via the iMore App for Android
  • It only doesn't matter when it's something Apple does not do as well in. But when it's something Apple has an advantage or so is said here, then his tune changes lol. Sent from the iMore App
  • Apologies, I thought the difference was evident but let me explain: Google makes their money off data and attention. If that doesn't bother you, great! Lots of "free" stuff! If it does bother you, not logging in is at least partial protection of your privacy. On Android, it's REALLY hard not to login to Google services. On iOS, it's annoying, but not impossible to not login to Google services. I like having that choice. Apple doesn't currently make much if any money off our data or attention, and Apple Pay is designed to protect privacy from merchant, so the integration isn't a negative. If I said "Apple's stuff usually costs more than Google's" I don't think I'd get much of an argument because it's a pretty accurate statement. Try saying anything the other way around and everybody jumps. Interesting.
  • I can see Apple Pay continuing to grow because it is a simpler option at the moment with the touch id integration and more partners/banks/devices coming on board to support it. It will become one of those features that continues to grow over this year/next year to maintain the lead in the area of contactless payments/nfc payments. I think it has a leg up on google wallet and other similar services because yes those services have been out for years but it takes Apple to be a game changer in this area. I think of it as the same way as smart phones that existed before the iphone, as music players existed before the ipod etc. I don't know if it will command the same attention say, 2 years from now or not, there are alot of areas that the service continues to need further development. There are alot of competitors and paying digitally is combined of many different implementations from other companies at the moment. I can say that I do use the Apple Pay service alot, and more people are aware of the technology in only 4 months. People that see it in use most of the time are like wow, what kind of phone is that, that is cool,etc. I am not a fan of CurrentC and similar payment system that is planned to roll out, I think it has already been hacked at least once in the last year and has not officially rolled out yet, and it seems cumbersome/scanning a QR code/other steps. I am looking forward to the competition as it is needed to keep Apple pushing forward/thinking out of the box and not getting too comfortable.
  • All that is very nice but when Apple pay in Canada ?
  • Soon, I hope!