How Apple’s update may turn the payments space on its head

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Apple last month announced the latest additions to its product lineup, as well as enhancements to its products. One new piece of functionality got very little attention, but it actually has the potential of disrupting the payments industry.

Last year, Apple opened up its NFC interface for third-party applications. That didn’t include payments, but users could manually open an app which then would listen and react to external NFC signals. However, unlocking your phone and opening an app is a bulky process, especially when it comes to in-store payments.

Since September 12, with the newly announced enhancements, any external device can now open an app automatically or trigger an Apple Pay payment by simply sending an NFC signal. The difference from last year is that the user doesn’t have to manually open an app anymore.

And it doesn’t stop there: triggering an Apple Pay payment doesn’t require an expensive POS terminal anymore.

Instead of using a POS terminal for in-store card-present NFC payments, the Internet of Things (IoT) device would trigger a mobile card-not-present payment – just like when using Apple Pay online.

What does this all mean for merchants and consumers? Things can get quite interesting.

Consider the possibilities: any device can send a signal to start the payments process. In an IoT world, a consumer could go to a gas station and pay at the pump seamlessly, with the pump initiating the signal to start the payment via the consumer’s iPhone.

Paying for parking could be as simple as holding up an iPhone to an NFC-enabled sign.

Securing new ink for your printer when you’re running out could happen the same way. Really, this could apply to any device that needs “refills.” Vending machines could transact effortlessly. “Things” can start the payment process with no connection to a physical POS terminal.

This opens up the idea of many, many things being automated with regards to payments. An electric car could be recharged and paid for via an NFC-enabled charging station. And this could all be done simply via the NFC tag and without registration, subscription models or similar.

Also, imagine automatic vendors like beverage dispensers. At the moment, they need expensive POS terminals with an online connection and many parts that can physically get damaged. In the future, a simple NFC tag could take care of all of this. And since it doesn’t even need energy (except to keep the drinks cold!) or a network connection in its simplest version, it could be placed almost anywhere.

Considering security, by paying via your mobile phone through Apple Pay, all you are sending for a transaction is safely-tokenized card details. Moreover, every Apple Pay transaction comes with secure biometric authentication. You also don’t need to register with another company that stores your data. You simply use the service, pay securely and go.

On a broader scale, outside of the U.S., this new functionality will help Apple Pay to spread faster in countries that don’t currently have it, as Apple is taking the POS terminal out of the equation.

In the midst of announcements regarding its new iPhones, new Apple Watch and enhancements to the HomePod system, it’s easy to see why this new functionality from Apple may have been overlooked. But it shouldn’t be, as it has the potential to disrupt the payments industry as we know it, and it’s a big leap forward for IoT.


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