It's the first day that iPhone 6 users can use Apple Pay to purchase goods and services online and at physical retail stores. However, while Apple promised Apple Pay support at 220,000 retail stores, only a handful of retailers are accepting payments with an iPhone for now.
These outfits include the following: American Eagle Outfitters, Babies "R" Us, BJ's Wholesale Club, Bloomingdale's, Champs Sports, Chevron, Disney, Duane Reade, Footaction, Foot Locker, House of Hoops, Macy's, McDonald's, Nike, Office Depot, Petco, PetSmart, RadioShack, RUN, SIX:02, Sports Authority, Subway, Texaco, Toys R Us, Walgreens, Wegmans and Whole Foods Market.
At least half a dozen other retailers are expected to roll out support for Apple Pay before the year ends including Anthropologie, Free People, Sephora, Staples, Urban Outfitters and Walt Disney Parks and Resorts.
For users to use Apple Pay, they first have to upload their credit card information to Passbook simply by taking a picture of their credit cards and entering a security code and expiration date. The information is then stored in a secure element, a non-hackable storage environment that is safe from hardware attacks. Users can upload multiple credit cards and choose among these credit cards with a single tap when it comes to pay at an NFC-enabled point-of-sale terminal.
Paying with Apple Pay is just as simple as Apple CEO Tim Cook promised. Users do not even have to touch their iPhone (or their new iPads when they start shipping later this month) to the POS. The transaction will begin once the terminal detects the iPhone, and the iPhone will automatically wake without the buyer having to touch the screen. To confirm the transaction, buyers simply touch the Touch ID sensor. And if they want to return something, they can bring the phone back to the terminal and tell the clerk they want to return the item.
Analysts agree that Apple Pay is mobile payments in its infancy. However, some experts think Apple Pay will end with the similar fate of Google Wallet and other electronic payment systems that failed to gain traction. For one thing, Apple Pay is, for now, severely limited to buyers who have the new iPhones, which currently number at around 10 million. Many retailers still have to jump in or have already pledged their support to CurrentC, another mobile payment system developed by the Merchant Current Exchange. Big-name retailers such as Bed Bath & Beyond, Best Buy, CVS, Kmart, Old Navy, Sears, 7-Eleven, Target and Wal-Mart are waiting for CurrentC and are not likely to sign up with Apple Pay.
"Apart from the cool factor, there's really not a lot of value for the average merchant at the moment," says e-commerce analyst Denée Carrington at Forrester Research. "Especially when you think about how merchants want to capture more information from consumers with each transaction."
However, many others believe Apple's history for revolutionizing the mobile industry could push mobile payments into the mainstream. The security of paying with Apple Pay, which uses a one-time security code with each transaction instead of the buyer's credit card information, can finally compel consumers to pay with their mobile phones than the old magnetic stripe credit cards.
"Right now, mobile wallets are sort of like e-commerce in 1995," says John Collison, co-founder of payments processing firm Stripe. "Amazon was one of the big companies that made people feel OK to put their credit cards online."
