With American Express recently emailing all Australian customers to let them know that Apple Pay is being launched in Australia soon, we thought it an opportune time to explain a bit about what this is and what it means to the average consumer.
Apple CEO, Tim Cook, also confirmed the launch of Apple Pay in Australia and Canada in an investor call a couple of weeks ago, and our own inquiries confirm that Amex and Apple are indeed planning to launch the Apple Pay service very soon in a shared launch.
What is Apple Pay?
Apple Pay is a service that allows the encoding of credit card information inside a device (like a mobile phone) in such a way that it can be safely transmitted when requested by another device (like a credit card terminal).
If you have ever used "Visa payWave" or a similar payment method by touching your credit card on a terminal in a shop (as opposed to swiping or inserting it into the machine), then you have already used the technology that underpins the financial transaction side of Apple Pay.
In the above case, the card contains an "NFC" (or Near Field Communication) chip that activates when it receives a magnetic jolt from the terminal. Incidentally, that magnetic jolt is why your credit card doesn't need to have a battery attached - it provides the power for the chip.
From a technical perspective, the point-of-sale service works a little like a secret knock. Think of the payment terminal tapping out the first part of "Shave and a Hair Cut", to which your NFC-enabled card or device responds with "Two Bits". Add a bunch of technical complexity of talking between different computers around the world in the blink of an eye and you have a credit card system that can safely authenticate that a card is a real card because it knows the secret knock when asked. ... and of course ignore the fact that everyone knows this particular sequence so it's hardly a secret knock.
Now, if we take the NFC chip that's embedded into a single credit card and we put it into a phone (or even a watch) and make it programmable so it can contain more than one credit card's worth of information and you have a system that can learn and contain all of a user's credit cards without having to re-issue a new device with every card ... and that's the beauty of the NFC phone payment revolution.
To add further security, we then make the user confirm their identity to ensure that their phone hasn't just been stolen. The simplest way of doing that is by a fingerprint scan, which Apple's compatible devices can already use as a key to unlock data within its encryption store.
Apple didn't invent this, and in fact many Android devices been able to do this for years ... however when three 500-pound gorillas get involved we all tend to want to sit up and pay attention.
|American Express / Apple Pay, Coming Soon (image courtesy of American Express)|
Gorillas ? What The ??
So, if two of the 500-pound gorillas are American Express and Apple, who is the third ?
If you wanted to launch a new payment service in Australia, you would want a major retailer on board if for no other reason than it provides great B-roll for a news story. There really are only two retailers with a large-enough footprint in Australia to matter .... so which of Coles or Woolies is our third gorilla then ?
The answer is simple ... look at the back of your American Express card. If it has a symbol that looks like a sideways WiFi icon, take it to both stores and grab some groceries. Which one lets you wave your card past the terminal for payment ? We did exactly that and ... Bingo! Woolies is our third gorilla.
Granted, the existence of the third gorilla in this equation is speculation on our part, so let's all watch the nightly news and breakfast shows in a week or two when the official launch happens.
Which Apple Devices Can I Use ?
The Apple devices that incorporate NFC chips currently are: iPhone 6/6s, iPhone 6/6s Plus, and Apple Watch.
Oooooh - So I'll Be Able to Use My Apple Watch to Pay at the Supermarket ?
Yep! And you'll look very cool doing it. Remember to wear your "I Love Apple" t-shirt as many selfies will be requested.
What's Next ?
The next exciting thing will hopefully be for developers (such as ourselves
) to gain access to the NFC chips on Apple devices and program them to respond to proprietary NFC systems, such as keyless entry to cars and other doors.
UPDATE 19-Nov-2015 ....
Apple Pay and Amex have officially launched in Australia today.
As of this morning, however, only the Apple Watch app is allowing the adding of a card to that device. The iPhone/iPad Wallet apps have not yet been activated. This is a fairly common strategy of releasing a system/feature to only a subset of users for a few hours to check load capacities and any real-world bugs that might come up ... so we expect that iPhone 6/6Plus/6s/6sPlus devices will be activated later today.
... and who is the third 500-pound gorilla ? Actually it turns out Amex and Apple have done quite a bit of negotiation behind the scenes because the following major Aussie retailers are already able to accept Apple Pay payments as of this morning: David Jones, McDonalds, Kmart, Bunnings, Coles and Woolworth. Some checkouts in some stores may be unable to accept the contact-less method of payment but for the most part this is working fine as of this morning.
|Here's what the screen looks like on your Apple Watch when paying via Apple Pay|