Apple Pay is demonstrated at Apple headquarters in Cupertino, Calif.
On Monday, Apple is rolling out a new way to pay: a digital wallet called Apple Pay. Millions of people with the iPhone 6 and 6 Plus will be able to tap — rather than swipe — at the register.
The move could be a major change in how we shop. Or it could end up as a blip on the map that fades away, as other "mobile wallets" have in the past.
Here are some questions you might be asking:
I have a leather wallet in my back pocket. Am I going to have it a year from now, given this mobile-wallet revolution?
If Apple is successful, you won't have credit cards in your leather wallet. It'll just be an accessory, kind of like a watch.
Apple preloaded the payment app onto the new iPhone 6 and 6 Pluses. The company made a big and highly public push to partner with retailers. Dozens of chains, including McDonald's and Walgreens, are accepting Apple Pay. But others, like Target and Starbucks, don't have the tapping technology at their registers yet. (It's called a near field communication chip.) Those companies will be able to accept the payment method through their apps.
That said, it's going to be hard to convert the masses — in part because it's already very easy to pay with a credit card. Apple knows conversion is not a given, and it's making this an all-out campaign. Years and years of others' (failed) attempts have shown it will take a push to make a mobile wallet the new normal.
When CEO Tim Cook announced Apple Pay, he emphasized the customer experience. But it's not just about the ease of tapping, right? This is a security measure.
That's right.
Apple Pay uses Touch ID, a biometric identification, to verify that you are the iPhone owner and not some thief tapping to pay. Then there's a chip inside the phone, which they call the "secure element," that generates a digital token. This token is for one-time use, and it's a technology that leading engineers and companies have been working to design for years. So if hackers get it, it's not the same as if they get credit card numbers.
There seems to be a lot of hype around this mobile wallet. But it's not the first one. For example, doesn't Google have one, too?
Apple and Google's mobile wallets had very different rollouts — and that's telling in terms of the differences between the companies and where the appetite for this technology stands.
Google canvasses the world with experiments. Its mobile wallet, released in 2011, is one such experiment. The launch was fairly limited: To use the Google Wallet, you had to sign up for a MasterCard account from Citibank or get a Google Prepaid Card.
With Apple Pay, the launch looks like an all-out united front. Now Visa, MasterCard and American Express are on board; and in addition to Citibank, there's Chase, Wells Fargo, Bank of America. Apple says its alliance represents 83 percent of credit card purchase volume in the U.S.
Apple's marketing push — putting pressure on retailers and banks to come along — could tip the scales. That said, if it does, Google and others can ride the wave.
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Transcript
STEVE INSKEEP, HOST:
Today, Apple is rolling out a new way to pay for purchases - a digital wallet called Apple Pay. We've talked about this a bit on the program. People with iPhone 6 and 6 Plus will be able to tap their phones instead of swipe their cards at the register. The phone, in a sense, becomes your credit card, possibly a major change in how we shop. We're going to talk about this with Aarti Shahani of NPR's team covering technology. Hi, Aarti.
AARTI SHAHANI, BYLINE: Hi.
INSKEEP: So digital wallet - does this mean that I would not have a wallet in the future if this thing catches on?
SHAHANI: Well, if Apple is successful, you won't have credit cards in your wallet. It'll just be an accessory, kind of like a watch is these days. Apple preloaded the payment app onto the new iPhone 6 and 6 Pluses. And the company's making a big and very public push to partner with retailers. So dozens of chains have already signed on, like McDonald's and Walgreens are going to accept Apple Pay. But there are other chains, like Target and Starbucks, that don't have the tapping technology at their registers yet. It's called the near field communication chip. So they'll just accept the payment method through their mobile apps.
Also, it is going to be hard to convert the masses, and in part, that's because it is really easy to swipe a credit card. I mean, I swipe multiple times a day. You probably do, too. And Apple knows that conversion to a mobile wallet it is not a given, and that's why they're doing this all-out campaign. Years and years of other failed attempts to do this have shown that, really, it's going to take a push to make the mobile wallet replace the credit card.
INSKEEP: Well, given what you've just said, what makes Apple think this is a good time to try?
SHAHANI: You know, they're not just banking on the ease-of-use. They're really banking on security and all of the concern, the mass concern, about credit card hacking. So Apple Pay uses Touch ID for one - the biometric identification - to verify that you are the iPhone owner and not some thief that's tapping to pay.
And then secondly, there's a chip inside the phone, which they call the secure element, that generates a digital series of numbers, like a credit card number, only a one-time use string of numbers. So if hackers get it, it doesn't really matter. It's a kind of technology called tokenization that leading engineers and companies have been working to design for years.
INSKEEP: And your colleague, and our colleague, Steve Henn has reminded us in recent weeks that this is a moment when a lot of companies are under pressure to upgrade their technology anyway. So it may cause some of them to ask, why not just try this? And I suppose we should also mention that Apple is not the only company that is rolling out this product - a digital wallet.
SHAHANI: Yeah, it's not the only one, and it's certainly not the first one. I mean, one comparison that really comes to mind for me is Apple and Google, in terms of their mobile wallets - really different rollouts that tell you a lot both about the companies and about the moment we're in. You know, Google rolled out its mobile wallet back in 2011, and its launch was pretty limited. I mean, to use Google Wallet, you had to sign up for a MasterCard account with Citibank or get a Google Prepaid Card.
And now with Apple Pay, you're seeing the launch looks like an all-out, you know, fiesta with Visa, MasterCard, American Express on board, and then Citibank and Chase and Wells Fargo and Bank of America. And Apple says its alliance represents about 83 percent of credit card purchase volume in the U.S. So really, they are going for scale here in a way that Google simply hadn't before.
Now, this marketing push, you know - and also putting pressure on retailers and banks to come along - that could really tip the scales to make mobile payment the new normal. And if it does that, then Google and other mobile wallet providers might be able to ride along the wave.
INSKEEP: Aarti, thanks very much.
SHAHANI: Thank you.
INSKEEP: That NPR's Aarti Shahani who covers technology and is telling us about Apple Pay - the digital wallet that's being released today. This is NPR News. Transcript provided by NPR, Copyright NPR.
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