Published on the 11/09/2014 | Written by Newsdesk
The launch of Apple Pay, which will turn the new iPhone6 and Apple Watch into tap-and-go digital wallets, can’t take place in A/NZ before 2015 because part of the security framework is missing…
At the heart of the mobile payments platform announced in the US by Apple this week is a service called tokenization which is provided by the main payment card issuers such as Visa and MasterCard. Instead of card details being stored on the smartphone, to protect the consumer a digital “token” linked to that card is issued and stored on the secure element in the iPhone.
When a purchase is made, it is that token, coupled with a fingerprint through Touch ID, that authenticates the payment. If the phone is compromised the token can be cancelled and a new one issued without having to replace the payments card itself.
Although the tokenization service will be available in the US shortly, allowing Apple to roll out Apple Pay for US consumers from October, both MasterCard and Visa this week acknowledged that this capability won’t be available in New Zealand until 2015.
Apple Pay joins a slew of other mobile payment services and digital wallets already available in New Zealand. Although Google last month announced that it had no plans to bring its digital wallet to Australia and there is no sign of it appearing in New Zealand either, there is a range of options already on offer from organisations including the banks (many of them NFC enabled to allow tap-and-go payment) and PayPal.
Even when Apple Pay is released in New Zealand it will likely prove a bit of a slow burn as it will be dependent on the speed at which people upgrade their handsets and merchants accept the technology. Analyst Telsyte yesterday also forecast that “price shock” would likely impact Australian demand and that’s likely to be the case here too, with only one iPhone6 model available for less than $NZ999 (and $A999 in Australia).
The New Zealand smartphone market however still has headroom. According to Research New Zealand, 59 percent of New Zealanders now own or have access to smartphones, up 11 percent from last year. Globally Android has 84.7 percent of the smartphone market with Apple holding 11.7 percent and with a range of other brands making up the remainder of the market.
Whatever the uptake of the new iPhones the arrival of Apple Pay will further legitimise both digital wallets and tap-and-go payments. While NFC enabled smartphones and wearables are not expected to replace plastic cards any time soon, they are likely to further challenge the cash economy.
