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Using NFC Payments in The Real World

The recently launched Apple Pay supports all current NFC (near field communication) reading payment terminals, just like Google Wallet. This includes McDonalds, Subway, Walgreens, Panera, Office Depot, and more. Your information is never given to the retailer, making it more like cash than US magnetic strip credit cards. The main difference between the services is in security, or at least the peace of mind the technical aspect of security will give you. Google Wallet stores your credit cards encrypted in their servers, while Apple Pay keeps them encrypted on your device.

Google Wallet stores your credit cards encrypted in their servers, while Apple Pay keeps them encrypted on your device.

Using Apple Pay or Google Wallet is as simple as placing your phone within a couple inches of a credit card reader while holding your finger on your iPhone 6’s sensor to confirm your identity, or typing a pin code on Google Wallet. Google Wallet supports most Android 4.4 devices (which adds up to about 25%), including the Nexus 4, HTC One M7, and Galaxy S4 and their successors, while Apple Pay requires an iPhone 6 or 6 Plus running iOS 8.1. NFC is a technology also used in most public transit cards. Android leaves the functionality of the NFC chip up to application developers, while Apple currently locks it down to their own service. Google Wallet also allows you to use loyalty cards in some retailers.

 

Like Google Wallet, Apple Pay will face difficult challenges

Rite Aid, CVS among retailers that have shut down NFC terminals for payments in response to Apple Pay

An alliance of retailers, including Best Buy, Walmart, K-Mart, 7/11, Rite Aid, and CVS, are prepping a competitor application, CurrentC, which will take payments directly out of your checking account using QR codes. This method has brought up significant security concerns among critics, compared to Apple Pay that uses credit cards stored and encrypted on your device and made accessible only by fingerprint identification. With the support of typically security conscious credit card companies and banks, it’s been expected for Apple Pay to bring NFC usage to the common consumer level.

When Google released Wallet in 2011, Verizon took the questionable move to block the service from their version of the Galaxy Nexus after partnering up with AT&T and T-Mobile to invest in competitor app ISIS (since renamed SoftCard to avoid confusion with the Islamic State militant group).

Over 200,000 NFC retailers in the US

Apple Pay, Google Wallet, and SoftCard are all compatible with the same NFC payment terminals, over 200,000 in the US, while CurrentC requires new QR code readers. Apple has previously been known to successfully break through the ways of generally stagnant and stubborn industries, such as carrier branding and bloatware. However, the clout of Apple seems to be exactly why CurrentC-partner retailers have disabled NFC payments for all to prevent themselves from losing the potential market when they launch next year. 

The US, unlike the rest of the world, does not have chip based mobile payment systems brought to your table at sit-down restaurants. You must give them your credit card, preventing NFC from being used.

Currently, there’s no way you can leave the house with only your phone. However, Apple getting in this game will prove crucial to the future of one pocketable unit to rule all. All US retailers need to replace swipe and signature credit card readers with the worldwide chip-based standard by October 2015 to avoid liabilities from shifting to them, and with this rollout it’s only going to make sense for them to implement NFC at the same time, provided they don’t continue going down this path of collusion.

Tyler Simpson, ThatOpinion, 10/26/14

Potential Spousal Fraud 

 via Consumer Reports

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Ashley Feinberg via Gizmodo

Deciding to try our luck at Subway, we were met with a few “ums” and some confused looks when we asked about contactless payment.

The store had just received the hardware that day, it seemed, and they were still getting the hang of things. After some discussion and deep study of the machine’s new instructions, the farthest we were able to get was bringing up a screen with a QR code—which is to say, not very far at all.

Next, we hit up a Duane Reade (owned by Walgreens). When it came time pay, instead of pulling out a credit card I pushed my phone next to the reader, held down Touch ID, and that was it. It was just as fast as paying with a credit card (though you do save time not having to fumble with a wallet), and the process was almost identical. Just instead of swiping a card, it’s a simple flash of the phone next to the symbol below.

Still, because it is Apple Pay’s first day of life, you might run into a few problems as stores get situated. Once the new locations are outfitted and trained, though, it actually is a wildly convenient and easy way to buy things. Of course, the other problem you might run into is actually finding partners. For now the list is (relatively) small, but will be constantly growing.

Not a bad start, but the real test will be getting more chains to hop on board. When and if that happens, Apple Pay might actually become the mobile payment golden child it so badly wants to be.

Barry Levine via VentureBeat

“With Apple Pay I have to enter my phone number on the PIN pad, then answer the questions about donating to charity on the payment terminal before I ever tap my phone to pay. Any appreciable time savings aren’t there. The half-second in time savings could be quickly eaten up by the cashier waiting for the receipt to print or if they want to hand me coupons,” said Richard Bagdonas, CTO of Mahana.

It’s worse at sit-down restaurants, he said, where there’s no point-of-sale terminal at the table. In those situations, Bagdonas said, “Apple is banking on OpenTable and other mobile payment companies to bake Apple Pay into their apps. This means Apple Pay’s success is based on the success of others.”

There’s another important fact: “Credit cards don’t rely on a battery nor do they rely on a fingerprint to work.”

 

“Google Wallet is in many more devices, but they’ve never managed to get it beyond the U.S. and it hasn’t really picked up any traction. I think there’s a long way to go on NFC pay tech. Even if everyone bought an NFC iOS or Android device tomorrow, we still have to wait for every merchant to upgrade their payment devices,” Stephen Rogers, director of marketing technology at VentureBeat Insight said.

 

And Parks Associates’ Jennifer Kent described Apple Pay as “a game changer because Apple does not release products without the necessary marketing resources.” None of the other mobile payment players “has put nearly enough resources into consumer education, resulting in a lack of traction for the mobile payments space as a whole.”

There’s also the matter of timing, she said. “Next year is when merchants will be upgrading their point-of-sale systems because of a new industry initiative intended to reduce the risk of fraud by accepting EMV payments, which are more secure than traditional mag-stripe cards.Payment terminals that accept EMV are typically able to accept NFC payments as well. There will be many more merchants who accept contactless payments in 2015 than ever before.”