Over the coming months, Apple will heavily promote Apple Pay and more and more retailers will sign up. People with the new iPhones - over 10 million, according to Apple - will then sign up to Apple Pay and start actively using it.
Apple could be the one
While many companies have tried to get virtual wallets off the ground before – Google Wallet being the most famous example – Apple could gain the critical mass needed to bring cash- and card-less transactions to the mainstream. As we already mentioned, in the first weekend, Apple has sold over 10 million iPhone 6 and 6 Plus handsets, which means that the company effectively has over 10 million people equipped to use Apple Pay right out of the gate.
Apple also created a large incentive for retailers to make their checkouts Apple Pay compatible. Instead of taking a cut of the retailers' profits – as Square does – Apple instead negotiated with the banks to take a 0.15% commission from their side, an unprecedented move.
"We want to invest in programs that respect our role in the ecosystem," James Anderson, senior vice president for mobile product development at MasterCard, told the New York Times. The incentive for the banks to cooperate with Apple Pay is, according to the Times, because banks will now be opened up to transactions that usually would've occurred using cash. Many shops have a "minimum spend" limit on credit and debit cards whereas Apple Pay would enable a customer to spend as much or as little as they wanted using just their phone.
In the name of security, Apple is using TouchID to authenticate transactions with Apple Pay. As long as a finger or thumb is in contact with the TouchID pad, the transaction will commence – when the contact is broken, the transaction fails and must be restarted. This system is attractive to the banks as it cuts down on credit card fraud. A pin number or signature can be faked or stolen, a card can be found and used online, and cash can be spent, but a fingerprint is invulnerable to all of these failings.
Of course, whether Apple Pay will be a success remains to be seen. All previous attempts have failed and getting people to ditch cash will be a tough task for Apple. But as more and more retailers sign up, and more and more iPhone users invest, Apple Pay can only get better and better – and the money Apple will make can only grow and grow.