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Apple Pay 360°

Friday, 09 January 2015 16:51
Posted in Blog
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Since the rollout of the next generation of Apple products, there has been an incredible amount of hype surrounding the new technology. For those of us in the payments space, Apple Pay is everywhere. If the new Apple launch has done anything, it’s provided our sales partners with a sense of urgency around the competitive landscape. There has been an influx of questions from our sales partners inquiring as to whether or not we can support it. At EPSG, we think the answer needs to be more than “yes.”

The response to Apple Pay has been overwhelmingly positive due to the fact that Apple did so much more than provide an enhancement to their technology. They worked with all the key players in the payments industry - from issuers to processors to merchants – to build a complete end to end solution that gets their technology to the market quickly, while making payments faster and more secure.

So now that the technology is here – the last obstacle for Apple to overcome is adoption. Despite all the buzz, the fact is that Apple Pay will take years before it becomes widely accepted.

Let’s take a deeper dive into the vast payments landscape to understand how an Apple Pay transaction takes place.

REQUIREMENTS FOR APPLE PAY

  1. Consumers need to have an iPhone 6, iPhone 6 Plus, iPad Air 2, iPad mini 3, or the Apple watch (not yet released).

  2. Consumers need to go into Passbook, or, under settings menu: Passbook and Apple Pay

  3. Once in the Passbook app or in settings under Passbook and Apple Pay, consumers can add the credit or debit card from their iTunes account to Passbook by simply entering the card security code. To add a new card on iPhone, consumers can use their iSight camera to enter card information. Customers of Bank of America, Chase and Citibank may have to call or text their bank to authorize a card’s use with Apple Pay. Discover cards cannot yet be used.

  4. If the consumer has the iPhone 6 (or other Apple Pay enabled device) and would like to use Apple Pay at a merchant’s location, the merchant must have point of sale equipment that is NFC enabled, with the NFC setting turned on.

  5. Retail/restaurant terminal merchants will need to purchase the Verifone Vx520 or Ingenico iCT250 and have the contactless flag turned on. Merchants must board on the Global platform.
  • If the merchant already has a Verifone terminal and would like a peripheral that would enable both NFC and EMV, they can purchase the VX805 SC CTLS.

  • If the merchant uses POS software or a gateway, the software provider must update their software to accept Apple Pay as well as add an NFC enabled peripheral for face to face transactions.
  1. Apple Pay can also be used in an eCommerce environment. eCommerce merchants will need to insure their gateway or software provider has updated their software using Apple Pay’s software development kit (SDK), currently available through Global, TSYS and First Data.

  2. Consumers will look for the icon below at the point of sale which will indicate that NFC is enabled:

  3. NFC
  4. Consumers wanting to use Apple Pay can hold their Apple Pay enabled device to the NFC reader and hold the Touch ID.

  5. The transaction will be encrypted and sent to the issuer for authorization.

  6. There is no change to a merchant’s settlement or funding process for Apple Pay transactions. Stay tuned for the Association’s Spring Release in 2015 to see if Apple Pay transactions will have their own interchange level or enhanced chargeback protection.

Although Apple has partnered with many national retailers to ensure they are Apple Pay enabled, the fact is that less than 2.5% of merchant locations are able to accept Apple Pay. With more than 39 million iPhone 6s sold, that’s a lot of potential customers. But how many iPhone 6 users will set up their Passbook app? And how many of those Passbook users will actually care if the merchant does not accept Apple Pay? Feedback from national retailers has been mixed. Both CVS and Rite Aid have backed out of accepting Apple Pay, while Whole Foods has reported great success with more one million Apple Pay transactions being processed thus far. Starbucks has one of the strongest mobile apps in the marketplace today – but they have intertwined loyalty rewards with it – and the loyalty piece along with the ease of use has really helped it gain traction.

In the end, consumers will decide if Apple Pay wins. As a valued sales partner of EPSG, be rest assured that we are fully committed to helping you address the needs of the market.

If you’d like to see Apple Pay in action in both a retail and ecommerce scenario, you can view this APPLE PAY VIDEO. Look for announcements about upcoming trainings on EMV and Apple Pay! If you have any immediate questions, please contact This email address is being protected from spambots. You need JavaScript enabled to view it.

By Melanie Gonzalez
  Director of Product Development

Melanie has spent her entire professional career in the payments industry, working for Top 10 processors such as First Data, WorldPay and Vantiv.  She has a proven track record helping companies develop go to market strategies, build multi-million dollar sales channels and engineer highly technical product solutions that drive revenue and strengthen client relationships.  Melanie recently joined EPSG as Director of Product Development and will lead EPSG’s initiative to build an innovative and robust product suite.

Last modified on Friday, 09 January 2015 19:50