Apple Pay is the next stage in financial innovation and development

10-second breakdown:

A recent payment processor born for the smartphone age, Apple Pay makes it extremely simple for customers to pay for physical purchases with their smart device. Because your card details are not stored on said smart device, Apple Pay has become one of the most secure forms of payment available.

The good:

It really can’t get any quicker to easier to make a purchase. With Touch ID users simply have to hold their iPhone or iWatch close to a sensor and double click the icon on their phone to make a purchase. No need to fumble around looking for the right app or waiting for your phone to load up. Apple’s whole focus is ‘single touch’ to make a purchase.

Apple Pay is just as easy to set up and install. If you have the newer iPhone’s it’s preinstalled. All you have to do is input all of your credit card information. If you don’t feel like entering an endless string of numbers from all your cards, you can just take a photo of each card and it will pre-populate the info into Apple Pay.

Apple Pay has multiple levels of security. The Touch ID sensor turns your finger print into your signature. Completely unique and not able to be forged. They then translates any of your real data into unique digital tokens which can only be read by the retailer.

The bad:

Currently Apple Pay may be too expensive for many merchants to adopt quickly. A contact-less payment terminal is required.

Apple Pay doesn’t work with older models of the iPhone. To use Apple Pay customers must have iPhone 6 or newer.

How it works:

So what is Apple Pay exactly? It’s the most popular ‘contactless mobile payment method.’ Basically, a customer can take their cell phone or smart watch, wave it over a NFC (near field communication) ready terminal and along with their fingerprint the payment is made. Apple Pay is only available on recent iPhones and Apple Watches, but there’s also competition from Android Pay by Google.

Although Android Pay has been around longer, America started to warm up to NFC payment methods when Apple announced Apple Pay back in 2014 and set it upon the world a month later. They pushed adoption along by convincing most major credit cards, banks, and retailers across quite a few countries to give it a shot.

Recently adoption for the technology has started to cool off a little but users of Apple Pay absolutely love the service, so it might be time to consider it if you run a physical storefront. Apple Pay won’t replace your main credit card processor, instead think of it like an add-on.

So why consider adopting Apple Pay? There are a few benefits to giving the NFC craze a shot, including convenience for both you and your customer, and lower credit card swipe fees from your processor.

Apple Pay was highly polished and thoroughly tested by Apple before unveiling it to the world. When they were finally ready, it was honed to a point. Usually, NFC transactions are faster than swiping a credit card or giving cash to your cashier. If you run a fast paced business it could really help keep the line moving.

It’s more convenient for your business as well, employees don’t need to count money or give change. Less margin for error and all they have to do is activate the terminal.

The kicker for most small businesses is that fact that taking Apple Pay gets better rates and lower fees than traditionally swiping a credit card. Yes, you read that right, there’s a reason why over 600 banks and 300,000 retailers and restaurants have adopted Apple Pay, and it wasn’t just for convenience sake.

While Apple was negotiating with banks and card companies before the big launch, they managed to reduce fees by as much as 10% in some cases for their payment system. It wasn’t black magic, it comes down to good business.

In the future, there’s going to be another NFC program called ‘Merchant Customer Exchange’ that allows users to upload non-credit cards into their phones, like gift cards and such. Credit card issuers knew this is on the horizon, and were worried that they would get cut out of the deal. When Apple approached them they saw an opportunity to keep relevant.

In addition, Apple Pay is the most secure method of completing POS transactions, Apple keeps everything end-to-end encrypted. You know, the same encryption that the government gave up trying to crack on their own. Apple essentially took on part of the responsibility, so credit card issues could lower their fees a little more as they don’t need to worry about security.

If you do decide to adopt Apple Pay, give your current payment processor a call. Although Apple secures the transaction they won’t get you set up or sell you a NFC-capable terminal directly.

The good news is that unlike expensive iOS devices, there’s no single official Apple brand hardware, almost any NFC reader will suffice and it shouldn’t cost you and arm and a leg. There’s a decent chance that you might already have the hardware too, if you recently switched your credit card terminal to a newer model to take EMV cards, give it a look to see if it has tap or NFC capabilities as well.

There are a couple of costs to think about before you decide to go ahead and set up Apple Pay for your business. There is the hardware cost, you may be required to order a new terminal at worst or best maybe just a NFC reader. In addition, depending on the type of reader you get, a few processors require software updates for your terminal, and a handful even require an upgraded gateway.

Also keep in mind that you’ll have to train all of your employees in the new hardware. If you have a higher turnover rate, this might be the ‘gotcha’ that makes it more expensive than you realize, because from here on out you need to add it to new employee’s training as well. Apple Pay might very well save you money, especially if you haven’t been happy with the rates your processor has been charging to take credit cards, but make sure to factor in all of the costs as well before you make a final decision.

Although it won’t replace your main processor, Apple Pay is a great addition to your POS setup, and you may even have the equipment necessary to use it already on hand. If you’re comfortable training your staff, Apple Pay could be a great way to save some money in the long term.

For complete rankings of all credit card processors, go here.

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