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of users who own Apple’s newest devices, and less than 10 percent of the U.S.’s POS locations currently support NFC. But those conditions
will change as iPhone and iPad customers replace their older devices and more merchants switch on NFC acceptance this year as expected.
Apple Pay also faces potential challenges in its anticipated international expansion. Canada, China and the U.K. are among the markets most likely to import Apple Pay, but implementations outside the U.S. could be trickier and take longer than expected, some analysts caution. “Agreeing
to the business model, security around card onboarding, tokeniza- tion services provisioning, how data are collected and shared by different parties, and providing access to the payments token on the phone are just a few issues that are likely to emerge in commercial discussions between Apple and banks in other countries,” Celent’s Bareisis believes.
The biggest issue Apple may face globally in expanding Apple Pay is the discontent among issuers in other markets that have to reconcile it with a lower interchange ceiling, notes Cherian Abraham, a senior business consultant with Experian. “Even in the U.S., downward pres- sures on interchange are becoming real, and we could see issuers pushing back when the terms [for the fees banks pay] renew, unless Apple carves out a more compelling role for itself in the commerce value chain,” he adds.
But no one can dispute the fact that Apple blazed a new trail
in the payments industry. “Apple Pay succeeded due to the align- ment of several stars—market- place clout with a world-class brand; a connection to the pay- ments industry via hundreds
of millions of card-linked iTunes accounts; great timing with the EMV migration and alignment with banks,” Epperson concludes. “All these factors contributed to the Apple Pay difference rela- tive to the previous attempts
of other would-be mobile payments disruptors.”
Beyond the Fingerprint: Biometrics and Future m-payments
volume 8 • spring 2015
Apple PayTM courtesy of Apple Inc.
Apple Pay deploys fingerprint biometrics—Apple’s Touch ID—to authenticate m-payments on its devices in a manner perceived to be easy to use and more secure than passwords, which can be stolen or compromised. Other m-payments innovators are said to be developing approaches that rely on
technology to recognize users’ faces, eyes, voices and even hand gestures for authentication.
But more exotic biometrics approaches for m-payments could be on the way, according to a PayPal executive. Jonathan LeBlanc, PayPal’s global head of developer advocacy, this year is spreading the word at conferences about the potential use of embeddable, injectable and
ingestible devices to authenticate m-payments users. Examples include silicon chips implanted in the body to detect the heart’s unique electrical activity and ingestible capsules that read unique internal features of a user’s body, with batteries that use stomach acid as their energy source.
Whether those or other security features take hold remains to be seen,
but controlling fraud and guaranteeing security in m-payments will be vital to the category’s success, Cherian Abraham, a senior business consultant with Experian, tells Paybefore. “One of the biggest dilemmas surrounding security in mobile payments is whether the measures various providers use to address it are onerous or inconvenient for consumers,” he suggests.
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