With the launch of the Apple Pay mobile payment system on Monday, many experts will be watching to gauge its potential success. As with all things Apple, though, Apple Pay is certainly starting off with a bang.
Ahead of its launch, more than 500 banks across the U.S. -- including American Express, Citi, Wells Fargo and Bank of America -- had already signed on to support Apple Pay. So, too, had a large number of retailers, including the Disney Store, McDonald's, Office Depot, Walgreens, and Whole Foods Market.
Apple is touting Apple Pay as an easy way to make mobile payments secured by Touch ID. The system can be used on the recently released iPhone 6 and iPhone 6 Plus, as well as on the just-announced iPad Air 2 and iPad Mini 3.
'Most Complete System Out There'
We reached out to Gerry Purdy, chief mobile analyst with the market research and consulting firm Compass Intelligence, to learn more about Apple Pay's potential.
"I'm looking forward to trying it," Purdy said. "With so many financial institutions supporting it, it's probably the most complete mobile payment system out there."
Apple Pay has several features that will likely spur its widespread adoption, Purdy said. In addition to the large number of financial institutions and retailers supporting the system, its use of Touch ID and a unique identifier for every transaction add a significant level of security, he said.
Essentially, Purdy explained, Apple Pay's technology will let users turn any of their credit or debit cards into smart cards.
Chip-enabled payment cards are widely used in Europe, but the high cost of implementing the technology has discouraged adoption in the U.S., thus far.
Another benefit of Apple Pay is its ability to support transactions without requiring the user to open an app. By enabling payments through contactless readers using Touch ID, the system will make purchases quick and easy, Purdy said. "You don't have to do any management."
Effects 'Could be Immense'
Many other mobile industry-watchers have also said they see great potential in Apple Pay.
"This is very exciting news and has the potential to change the payment landscape, at least in the U.S. where merchants are being breached every other day and are up to their eyeballs in security issues and expenses," noted Gartner analyst Avivah Litan.
"Apple is doing some very interesting things [with] biometrics, tokenization, customer experience and so much more," IDC analyst James Wester recently said. "The long-term effects of Apple Pay on how we shop and pay could be immense."
GigaOM analyst Paul Sweeting surmised that Apple Pay "feels right on time. Our current system for mobile payments, which relies on magnetic stripes and clearly vulnerable point-of-sale terminals, is quite obviously broken, as anyone who has shopped at Target or Home Depot lately can tell you [referring to their recently breached systems]. The need for a more secure, convenient and technologically up-to-date system is manifest, making it ripe for redefinition."
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