After launching in the United States over a year ago, Apple Pay is finally set to launch in Australia this year.
What is it?
Apple Pay is an app that allows you to use your iPhone to make credit or debit card payments in person, simply by tapping your phone to an EFTPOS machine and verifying your fingerprint on your iPhone.
This is possible due to Near Field Communication (NFC) technology, which has become a common feature of smartphones over the last few years.
A little late to the game, Apple has begun including NFC in its iPhones as of last year’s iPhone 6. With this, it launched Apple Pay in the United States and then later in the United Kingdom.
Why has it taken so long to come to Australia?
While Apple Pay sounds like a very convenient payment method, there is a catch: Apple wants a slice of the interchange fees that banks charge. These fees amount to $2 billion dollars annually in Australia and the banks want to keep it in their pockets.
You’re probably thinking that Apple charging a fee is reasonable, and it certainly is, but when the competition (Android devices) has been letting you use their NFC technology free of charge for years, why would you pay this newcomer to let you use theirs?
In spite of this, Apple seems to have found someone willing to pay them to use their new app in Australia: American Express. This opens up an opportunity for American Express to advertise with Apple, which will both show off the convenience of the new payment method to entice new customers and pressure competing banks into giving in to Apple’s fees.
What’s the bottom line?
NFC technology is a fantastic tool that, if implemented properly, could allow for your smartphone to replace most of the cards in your wallet and more; and it’s becoming more and more common worldwide. BMW has NFC-enabled car keys, and some places allow you to pay parking tickets and public transport with NFC technology. While NFC cameras allow you to wirelessly share photos with other devices and many hotel key cards use NFC technology.
Imagine if all of these functions could be performed by your smartphone.
A smartphone that can get you onto your flight, into your hotel room, pay for your rental car then unlock the car door and more, is a smartphone truly worthy of its name. But this will never happen until everyone can reasonably access NFC technology, and it’s for this reason that I personally hope that the banks hold out on accepting Apple’s fees to encourage them to let developers use NFC free of charge, just as Google does.
