Creating a worldwide ecosystem of payments is no easy feat. What banks have been able to achieve in conjunction with credit cards is truly a real accomplishment. Just imagine the gazillion transactions that occur daily between the two that in general, occur seamlessly sans problems. That and several other reasons, is why it has been difficult to create a universal payment system or anything that can approximate one. The digital wallet has really been left behind many of the big technological advances, at least until now. There is something that is crystal clear however, that innovation in this sector will not come from a bank nor other financial institution, but from a tech company.
This week launches what promises to be the digital wallet and payment system most promising of all, Apple Pay. Unlike its predecessors like Google Wallet, this product has a real chance to make an impact in the financial industry. What features does this new system have that make it so revolutionary?
To start with, it is integrated with Apple phones that, although they do not have the highest level of penetration, they do have a high level of influence. It is easy to use, you only have to bring the phone or watch (which comes out next year) near the cash register while you use your fingerprint to authenticate the transaction, a process that you can do with one hand.
There are also apps like Uber, Instacart and Tickets.com that are already integrated with the Apple Pay system, where you only have to select the option when paying and place your finger on the Touch ID sensor to authenticate the transaction and presto.
Apple promises a secure system where transactions have unique identifiers and where personal information that can be compromised by hackers will not be stored. More than 220,000 establishments will now accept the new payment system, but until it really launches, it will be hard to know whether it is a success. Although that number seems large, it is only 2.4% of the 7 to 9 million merchants in the country.
Another challenge is that chains like Walmart, Bestbuy, Subway and others, are creating their own system to compete with Apple Pay.
What happened to other solutions like Google Wallet and PayPal that have not been able to dominate this market? Good question. These systems, although already adopted by millions of users, have not been able to create the necessary demand so that users replace their wallets altogether. If they have not been able to accomplish this thus far, after this month it will be difficult.
Apple has the proven reputation of entering dysfunctional and lucrative industries such as the music and online video distribution and create a coherent and simple solution for users. Let’s hope that is the case with Apple Pay, as I’m truly tired of having to lug around a pile of plastic cards in my pocket everyday.
[Video below of CNN en Español commentary on Apple Pay in Spanish]