Apple Pay: Too complicated for the real world?

NFC payments are in common use across the UK, Europe and much of the rest of the world, to speed up small value transactions. Why slow things down with a biometric signature?

Living in the UK and travelling around Europe and the Americas (and occasionally to Asia and Australasia) it's fascinating to see how payment technologies differ in different parts of the world. Apple's announcement of Apple Pay has thrown those differences into stark relief, as it shows just how far behind the rest of the world the US lags.

In the UK we've been using the Chip and PIN technologies that are just starting to roll out in the US for more than a decade now (it was a novelty to actually use my PIN in a Dallas Walmart back in May). Chip and PIN is widely credited for significantly reducing credit card fraud in the UK, by using the card to encrypt transactions from store to payment provider.

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It's now being joined by a related technology, the NFC-based Tap and Pay service that's being used for relatively low value transactions, up to £20 — a technology that's closely related to the more complex Apple Pay.

Tap and pay is still relatively new in the UK, but it's becoming increasingly common. Already most coffee shops in London are using a new generation of chip and PIN payment terminals that hide an NFC sensor behind a large LCD screen.

If you're using an NFC-enabled card, all you need to do is tap the screen to make a payment. It's quick and easy, and uses the same secure cryptographic connection between the chip on your card and a payment provider. As those new terminals, which look much like the existing Chip and PIN terminals roll out, we're going to see Tap and Pay used in a lot more places, speeding up transactions in busy locations.

The technology is also rapidly becoming the preferred payment mechanism for London's public transport network, which has been using NFC technologies to replace the old paper tickets. Tap and Pay has been available on buses for the past year, and this week it rolled out across the rest of the network (adding Tube and many suburban rail networks).

While Transport for London's contactless Oyster ticketing system has been successful, it hasn't had the societal impact that Hong Kong MTR's Octopus has had. There you can use a contactless rail card to pay for much more than travel — they're even accepted in Starbucks.

We need to concentrate on how they work like cash, not how they work like credit cards. Simplicity is the key to success, not complexity.

That wider use case has made Octopus cards ubiquitous, not surprising in a city that's as reliant on public transport as Hong Kong. Most of them are the familiar plastic cards, but right from the beginning fans hacked the hardware, stripping out the antenna and chips and building them into bracelets and other jewellery.

That resulted in the MTR making other official form factors, and you've been able to pay with an NFC-enabled watch across the city for the last decade as a result.

The TfL move to supporting contactless payment cards across its network should go a long way to popularising Tap and Pay in the UK, encouraging use of RF-shielded wallets with external pockets to avoid what TfL is calling card-clash — the effect of trying to tap in to a payment gate with two cards in close proximity to each other.

It should also encourage use of NFC-based payment apps in phones. The UK's EE network is working with MasterCard to deliver its Cash On Tap application on many Android devices.

Cash On Tap is relatively simple. Used for payments of less than £20, and linked to an existing MasterCard account, it lets users pay by simply tapping an Android phone running the app on a standard Tap and Pay reader. There's even support for the TfL contactless payment service.

At the other end of the scale, Barclaycard is offering an NFC wristband that can be linked to a Visa card — just tap your wrist on a reader as you go.

The ubiquity of Tap and Pay is a big challenge for Apple in bringing its Apple Pay architecture to the rest of the world. Chip and PIN has changed how people pay in the UK and much of the rest of the world, and the simplicity of Tap and Pay looks set to follow in its footsteps.

The biggest challenge to Apple Pay is the simplicity of tapping a card on a reader. There's no need for biometric scanning to unlock the card; something that's critical where people are paying on the run.

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It's easy to imagine the chaos at Piccadilly Circus tube station at rush hour when people struggle to unlock devices and tap, slowing down the crush of commuters, or when someone blocks the entrance of a number 14 bus outside Harrods, while juggling phone, fingerprint and several shopping bags (and that's ignoring the issue of batteries running out just when you need to pay).

As admirable a technology Apple Pay is, its reliance on biometric identification risks affecting user acceptance of NFC-based payments — and not just for the user, but by society at large.

Payment technologies need to be simple, just like the ultimate payment system: cash.

We have the cryptographic systems to make them relatively secure, and the machine learning algorithms that quickly identify fraudulent transactions. By restricting NFC to low value transactions we remove additional risk from the system, and make tapping as easy as paying by cash. Adding in additional biometric steps only slows the process down, adding friction to something that needs to be as frictionless as a dollar bill.

NFC technologies are a powerful tool, and we have the infrastructure to make them successful. But one thing is clear, from the ways they've been used across the world: we need to concentrate on how they work like cash, not how they work like credit cards. Simplicity is the key to success, not complexity.

At this point that simplicity seems to be something Apple Pay lacks — a rather odd choice for a company with as strong a focus on user experience as Apple. Has "Designed in California" become too Californian for the rest of the world?

Read more on Apple Pay

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