It’s official. Apple’s (AAPL) new mobile payment platform — Apple Pay — will go live this Monday, October 20.
The system will be available to any Apple iPhone 6 or iPhone 6 Plus user once they download the iOS 8.1 software update. (iPhone 5s, iPad Air 2, and iPad mini 3 users will also be able to use the service. And when the iWatch drops next year, it’ll be on that, too.) AAPL also reports earnings on Monday, so investors will have quite a lot to digest early next week.
Apple Pay has the potential to be a game-changer, and if widely adopted, could fundamentally change the way we do commerce.
Just What Is Apple Pay?
Apple Pay utilizes “near field communication” technology that encrypts a user’s data and then relays it to another NFC-enabled device when requested. In layman’s terms, AAPL wants to turn your phone into a wallet, and Apple Pay lets users store their credit cards on their phone.
With the new fingerprint-reading technology of the iPhone 6 and iPhone 6 Plus, transactions should be expedited as well as secure.
AAPL is partnering with more than 500 banks to support the feature, and will team with most major credit card providers, as Visa (V), MasterCard (MA), and American Express (AXP) all plan to participate.
If you have a Visa, MasterCard, or American Express — Discover (DFS) may also join the rodeo soon — you can add your credit or debit card to your “Passbook,” the native Apple app that already stores things like tickets and boarding passes. Because the company uses encryption and the encrypted numbers are never stored on Apple servers, not even merchants will be able to divine your card numbers.
It will become even more absurdly simple to buy things through iTunes, and in-app purchases will also merely require one-touch confirmation to process. Brick-and-mortar retail is the biggest question mark, as Apple Pay’s success depends largely on how quickly NFC technology is adapted in physical stores.
While a similar service by Google (GOOG), Google Wallet, has existed for years, it never really caught on. Meanwhile, eBay’s (EBAY) PayPal remains the king of the hill in digital payments. But with tons of banks and credit card companies on board, a devoted user base, and increased security features, Apple Pay could be the real deal.
And with Apple taking a cut off of each transaction that happens, this could be a big boon to AAPL stock.
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As of this writing John Divine owned shares of AAPL stock, GOOG stock, and GOOGL stock. You can follow him on Twitter at @divinebizkid.
