Apple Pay will soon be a thing in the US, but that’s only the first step for the service.
It’s also a sign of the times for the technology’s ability to scale.
For starters, payments will likely be much faster for people who don’t have credit cards, says David Shor, a payments expert at RBC Capital Markets.
“I think the tipping point for the world will be when there are a lot of people who can pay in a way that they can actually afford.”
For a service like Apple Pay, that’s going to be a huge boon for the consumer.
For the first time, a billion people can use an Apple Pay-enabled device at once, thanks to the technology.
But Apple Pay’s potential to become a major financial tool also has a downside: it could make credit card payments more cumbersome.
That’s because Apple Pay is a payment network, and credit cards have to have a physical checkout experience to work.
“The payment networks that use the payment network technology are not built to make payments as easy as credit cards,” says Shor.
That means it’s not easy for people to get a payment.
“It’s like the internet,” says Michael Boulware, a payment technology consultant at R&R, a marketing and technology firm.
“When you have a payment, it’s going be difficult to do that without going through a third party or going through an intermediary, which is why there’s a lot more of a concern that credit card networks are going to get too complex.”
But credit card companies are making strides.
The credit card industry’s average transaction volume was about $13.7 billion last year, up from about $12 billion in 2013, according to data from credit card tracking firm CreditCards.com.
The company also recently announced that it will introduce a new credit card network called ApplePay for merchants, as well as Apple Pay for consumers.
In short, Apple Pay may be a game changer for the payment industry.
“There’s no question that the Apple Pay payment network will change the way merchants and consumers are paying for things,” says Ben Ozer, a partner at law firm Greenberg Traurig.
“Credit card networks have never been designed for mobile payments.
There are a number of reasons why credit card technology has never been adapted to make mobile payments easier and more accessible.”
But that’s not to say that Apple Pay can’t be disruptive.
For one thing, Apple has the backing of PayPal and other major credit card players.
“Apple Pay has been built from the ground up for the mobile payments industry,” PayPal said in a statement.
“This partnership with Apple means we will continue to innovate and support the mobile payment space for years to come.”
But Apple has also faced some hurdles in its journey to mainstream acceptance.
The iPhone maker has struggled with poor sales for a mobile payment app, and the company has struggled to make it a popular product for consumers who prefer using their credit cards for other purposes.
Apple Pay has faced several lawsuits, including a class action filed last year by an Apple Watch user, who claims the service made her late husband pay for her funeral.
But in a court filing, the company said the lawsuit was “unfounded” and that the charges were “unfair” because the iPhone maker had agreed to pay up to $100 million in legal fees.
In a statement, Apple said it is committed to working with third parties to develop and deliver a robust and secure mobile payment network.
“Our commitment to our customers and our customers’ trust is unwavering,” the company wrote.
Apple says it has created a network of “firmware and service providers” for credit cards and Apple Pay.
The payments network “will provide an interoperable mobile payment experience to consumers that is secure, secure, and free from fraud and malware.”
But while Apple Pay was designed to be simpler than credit cards (and the company is now adding more to its payment network), it’s still not as easy to use as credit card payment networks.
For instance, some credit cards require a special number on your card.
That number is also unique to the card.
“That number is not part of the payment process,” says Boulwer.
“A consumer’s card number is a physical number that is assigned by the card issuer.”
And that number is what’s required for the card to work, not the merchant’s name.
Apple said the number is the only part of a payment card that’s unique to each merchant.
It also said that if a card is purchased at a third-party store, it will not be linked to your card number.
In other words, if you buy something from a retailer and you use your Apple Pay card, it won’t be linked with your card at the point of sale.
That makes it difficult for consumers to easily access their credit card information, even when they want to.
That could make Apple Pay a potential liability for card issuers, who may have to sell off their payment network to Apple Pay