4 Ways Adopting Apple Pay Can Benefit Small Business Apple Pay just may revolutionize cashless payments.
By Rob Bertke Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Unless you've been stranded on a remote island the last few weeks, you've heard the Apple Pay news. While Apple isn't the first company to enter the contactless payments market, it's certainly entering the market in earnest, since more than 800 million consumers already use the Apple iTunes Store and more than 500 million Apple iPhones have been sold since 2008.
As a small business owner, you may be wondering what benefits might exist for you when customers start using Apple Pay. You're also probably curious if Apple Pay will take off, and if so, how fast. Here are a few things to know and consider as we approach the October availability date.
Related: Why Apple Pay Could Be a Game Changer for Businesses
1. There's potential for increased security and privacy for your customers. Apple Pay is enabled through near field communication (NFC) technology, which enables contactless communication between devices—like a smartphone and payment terminal—that makes it possible for consumers to make payments, access digital content and more. NFC is already familiar and popular in parts of Europe and Asia but has yet to take hold in the U.S.
The new Apple iPhone 6 and 6 Plus, and the new Apple Watch, will include NFC chips plus Touch ID fingerprint identity sensors.
Apple Pay features multiple levels of security to ensure consumers' credit card data is relayed safely from the merchant to the credit card company and back again. After consumers store their credit card data in the Passbook iOS software application ("app"), their identities will be verified at the point of purchase using the Touch ID sensor. Beeps and a gentle pulse (Apple Watch) or subtle vibration (iPhone) will confirm payments have been made.
Apple Pay will utilize encrypted NFC technology to wirelessly connect with a merchant's nearby cash register and, for authentication purposes, generate a unique security code for every transaction. A merchant will never get consumers' names or credit card numbers. You won't have to worry about losing a customer's credit card information because you'll never have it in the first place.
We won't know how truly secure or private the Apple Pay technology is until it has hit the market and merchants' systems are tested. Hackers undoubtedly will try to penetrate Apple Pay and Apple will need to keep them from succeeding. For now, Apple Pay certainly seems very secure and, for a technology geek like me, very, very cool.
2. Taking mobile payments mainstream could provide you with an additional opportunity to compete. It's far too early to say if Apple Pay will revolutionize the way we accept and process credit card transactions. We know Apple is one of the best at generating demand. Barclays plc says Apple could sell more than 61 million iPhones by the end of 2014.
We also know Apple Pay is incorporated into the Apple Passbook mobile wallet and backed by American Express, MasterCard, Visa and card-issuing banks responsible for 83 percent of credit card transactions. More than 220,000 merchants have said they're ready to process credit card transactions through Apple Pay.
Apple appears to be committed to forging payment partnerships with businesses, too, as evidenced by Apple Pay pairing with ecommerce applications currently used by organizations like Target, Groupon, Uber and Panera. If Apple Pay takes off and increasingly more big-box retailers begin accepting it, small businesses will need to follow suit or risk being left behind.
Related: Apple Pay May Be the Creative Leap That Outmaneuvers Samsung
It's more important than ever that you support multiple payment types and devices. Small businesses can often adopt new technology more quickly and seamlessly than larger businesses. That will be advantageous for the small business community, should Apple Pay take off.
Now just may be the time for mobile payments to finally take off. Consumers seem to be ready and the technology seems to be getting better, cheaper, and easier to use. Small businesses can benefit from payment providers guiding them through this evolution.
3. You might already be prepared to accept Apple Pay. Small businesses will need a payment terminal supporting NFC in order to accept and process Apple Pay transactions. By October 2015, all merchants will be required to support credit cards with EMV chips, or risk accepting more liability if a breach occurs and consumers used EMV cards to pay for their purchases. Not all NFC-capable readers are compatible with Apple Pay, but many are, since nearly all EMV-enabled payment terminals can also handle NFC transactions. Your payment processor can tell you more about incorporating Apple Pay as a payments option.
4. Apple Pay will provide a simpler payments environment for your customers. Essentially, Apple Pay will streamline the payments process for consumers. They can store all their credit cards data in Passbook, then choose which card to use for each transaction. Consumers can make transactions using only their Apple Watch or iPhone; no traditional wallet required.
Like consumers, companies of all sizes can benefit from a streamlined payments environment that makes business management easier and smarter. With integrated payments, small business owners can control their entire payments worlds from a single screen, saving time and effort while improving cash flow management.
Time will tell, but Apple Pay could forever alter the payments industry. Small business owners should at least prepare for the elevated attention and potential demand typically following new Apple technology releases.
