I recently bought a cup of coffee, but I did not have any cash handy. I used a credit card, and the result was a veritable dystopia that will surely haunt my sleep forever.
First, I had to reach into my back pocket and remove my leather wallet. Then I had to pick out a plastic card, taking care not to pull out my driver’s license or Metro fare card. Somehow I managed to succeed on the first try. Then I swiped my credit card on a device positioned near the cash register. (Should the magnetic strip face right or left? That was my horrific choice.) Then I returned the plastic card to my wallet and went on with my day, scarred yet unbroken. I understand my credit card company will be including the $2.25 I owe them for that coffee on some sort of invoice later in the month, the receipt of which will surely will be yet another brutal reminder of the burdens of that day.
I kid, of course. Charging a cup of coffee or pretty much anything else is not a big deal. At most stores it is a remarkably seamless process, particularly now that most retailers have gotten out of the habit of requiring signatures for smaller purchases. But that’s not how Tim Cook sees it.
Mr. Cook, the Apple chief executive, introduced a new mobile payments service Tuesday as part of the company’s big product rollout. The idea is that instead of experiencing the misery of fishing around for a credit card, you put your phone up to a transponder and touch the screen, and your transaction is complete.
It’s a dangerous business to bet against Apple’s ability to make a product that you didn’t think you needed as part of your daily life. But “Apple Pay” looks as if it may be one of those offerings that don’t live up to the company’s hype. It would seem that in Mr. Cook’s mind, the current process of a retail transaction is something actually resembling the series of horrors described above. The core challenge Apple faces is that buying things with a credit card isn’t nearly as onerous a process as they make it out to be.
Mr. Cook showed a video at the product rollout of a woman burrowing in her purse for a credit card, navigating past a box of Tic Tacs — Tic Tacs! — and struggling to open her wallet in order to find her card, then being asked to show her driver’s license before completing the transaction. It had a lot in common, actually, with those infomercials in which actors manage to horribly bungle the most basic tasks until some new product solves a nonproblem.
Apple Pay does appear to be more secure than plastic credit cards. As Mr. Cook pointed out in the presentation, a credit card reveals all the necessary information for a thief to exploit and go on a shopping spree, whereas Apple Pay requires the purchaser’s fingerprint to run a charge. The only problem from Apple Pay: The costs of fraud are borne by credit card issuers, and sometimes retailers themselves. Just ask Target, and now Home Depot, both of which have faced huge data breaches and are paying the price.
So you can see how banks and retailers will be enthusiastic about switching to a more secure way of paying. Indeed, Apple has already lined up giant banks — including Bank of America, Chase and Wells Fargo — and giant retailers, including McDonald’s, Walgreens and Macy’s, to use the service.
Molly Wood on Mobile Payments
Times technology columnist Molly Wood says consumers may see a rise in the use of mobile payments now that the iPhone has a chip that will work at tap-to-pay payment terminals.
Publish Date September 9, 2014. Image CreditSoftcard, via PR NewswireSo Apple Pay certainly has the potential to revolutionize how people buy goods. But security chips widely in use in Europe are gradually becoming available in American credit cards. The recent breaches are only making that process more urgent for card issuers.
But the bigger question for Apple Pay is whether consumers find it handy enough to convert from credit and debit cards.
Despite the video of a fumbling, bumbling purchaser, the act of buying something with a credit card is pretty efficient. The same woman who fumbles and bumbles in retrieving credit cards from her wallet begins the “after” segment with her iPhone already in her hand. But surely she would have had to retrieve her phone from the same Tic-Tac-laden purse!
And whatever the benefits of buying items with a phone offers, consumers will also have to deal with some key disadvantages. Because using Apple Pay requires that you use your fingerprint ID, you can’t do the equivalent of handing your credit card to a friend or family member and have them make a purchase for you. (No sending the intern to pick up coffee with instructions to put it on your card, for example.)
And if your phone battery dies or you spill something and your phone goes kaput, you could easily find yourself broke and with no way to get home unless you keep plastic cards in your wallet as a redundancy measure, which is the whole thing Apple says it is trying to make unnecessary to begin with.
There’s a broader lesson for anyone trying to overhaul these purchasing mechanics, which applies to Apple, digital-payment companies like Square, and even the enthusiasts of digital currency Bitcoin who envision that the cryptocurrency will become central to electronic transactions of all sorts.
Capitalism has long made it easier to buy and sell things, with a centuries-long evolution from barter to metal coins to paper money to the credit card. But each of those represented a major advance in convenience over its predecessor. If Apple Pay or competing mobile payments products are to succeed, they’ll need to convince us they have a better way.