Apple has ventured into the world of mobile payments with the launch of their Apple Pay service.
Aimed at replacing physical wallets, the service is integrated with the company’s new watch and iPhones. The Cupertino company will use near-field communication (NFC), which is a technology that allows people to pay for items by merely waving their mobile device on a payment terminal.
“Apple Pay will forever change the way we buy,” said Chief Executive Tim Cook during the launch of the service.
Apple noted that transactions would be more secure compared to the plastic credit cards mostly used by today’s consumers.
The service will work with the major payment networks of Visa, MasterCard and American Express. The contactless payments will also be accepted in 220,000 merchant locations.
The move toward paying with a phone is the newest development in an industry that used to rely on manual processing machines and carbon paper. Debit and credit cards have eclipsed checks and cash, with card payments accounting for over 50 per cent of retail goods and services paid for by Americans since 2003.
Public transportation authorities, merchants and payment companies are excited about the prospect of speeding up transactions using near-field communication. However, customers have been hesitant to let go of their credit cards, partly because they are easy to use and many merchants still do not accept NFC-based payments.
Matt Dill, Visa’s senior vice president of innovation and strategic partnership, said: “When a company like Apple makes a move to enable a new experience, it becomes more impactful.”