It may come as no surprise that consumers look forward to fall for three reasons: 1) Pumpkin Spice everything, 2) Black Friday/Cyber Monday, and 3) Any new gadget Apple provides.  This fall, pumpkin spice invaded the shelves earlier than usual, but as the sun rises, Apple released the new iPhone 6, iPhone 6 Plus, and Apple Watch right on time equipped with one little surprise – Apple Pay.

In today’s world where no one uses checks and cash is so 2005, consumer use of debit and credit cards is starting to see a decline while mobile payments are on the rise. According to Business Insider, “In late 2013, just 6% of US adults said they made a payment in a store by scanning or tapping their smartphone at a payment terminal. That percentage will go up to 8% this year.”  Although, that 2% jump doesn’t seem much, Apple is banking on its devoted fan base and its reputation for having “the unique ability to change consumer behavior on a large scale” (Business Insider).

So what did Apple create? Or should we say, recreate?

According to QSR Magazine, Apple does not necessarily need to create new products every year, but more so the company takes existing technology (debit and credit cards), integrate it (mobile platform), and make it consumer friendly and appealing. Users pay for goods online and in physical stores directly from their devices – no wallet necessary.  Customers pay by simply waving their iPhones near a point-of-sale (POS) reader that accepts Apple Pay eliminating the need for a magstripe, which can lead to potential fraud by having a card “skimmed” and cloned.

With consumer concerns about security are at an all-time high, a survey conducted by stated, “[that] 44% of respondents said they would never use a mobile phone to make mobile payments.” This could be the result of recent database hacks into major retailers such as Target, Home Depot, Dairy Queen, and Jimmy Johns which only solidifies consumers’ concern with security.

Apple’s Solution: An Apple a Day Keeps the Hackers Away

Recent reports from both Business Insider and QSR Magazine state that Apple Pay uses Near-field communication (NFC) and has been equipped with a two-part hardware security system – Touch ID fingerprint (identification) sensor and a chip in the Apple device that encrypts all data. This isn’t your ordinary encryption either. The chip generates a random, one time 16-digit number for each transaction that mimics a credit card number – a number that is never stored in the phone and is meaningless to hackers. Using only this random encrypted number, the clerk does not see the customer’s name, credit card number, or security code (main components in creating debit or credit card fraud.)

To calm the nerves of many users, Eddy Cue, Apple’s Senior VP of Internet Software and Services, stated in an interview, “[That] if your iPhone is lost or stolen, you can use Find My iPhone [app] to quickly suspend payments from that device.”

This is great news to hear considering that “any credit card associated with a user’s existing iTunes account is automatically included in their Apple Pay wallet” (Chain Store Age), and according to, “Apple Pay also manages consumer transactions for multiple cards,” making it easier than ever to add a new card just by taking a photo with the iPhone’s built-in InSight camera (Chain Store Age).

With everything, there are limitations. Yes, even Apple has limitations.

Although Apple Pay comes standard on Apple’s new models, it works only on the iPhone 6, iPhone 6 Plus, and Apple Watch (equipped with NFC), and then only after the user downloads iOS 8.1. Older iPhone models do not have the NFC antenna built in, so it will not work. Also, partnering companies must employ a point-of-sale reader that accepts Apple Pay, which according to The Washington Post, “only 10% of merchants [currently] have active sensors that can read such signals and such devices can cost around $500 to install.”

The list below, of potential Apple Pay partners, was provided by the Orlando Business Journal:

Banks/Credit Card Companies

1. Visa 6. Capital One
2. MasterCard 7. CitiBank
3. American Express 8. Wells Fargo
4. Bank of America 9. Chase
5. PNC


1. Starbucks² 11. Subway
2. Uber 12. Walt Disney World
3. Staples 13. Whole Foods Market
4. Walgreens 14. PETCO
5. Bloomingdales 15. Toys R Us
6. Disney Store 16. Babies R Us
7. Macy’s 17. Panera²
8. Sephora 18. Groupon
9. McDonald’s³ 19.
10. Nike 20. OpenTable

¹ According to, more than 220,000 merchant locations are in the works to partner with Apple Pay.

² Starbucks and Panera Bread both will be integrating Apple Pay with each company’s already existing mobile payment platforms.

³ McDonald’s will accept Apple Pay at virtually all its 14,000 stores and will provide seamless integration for Apple Pay equipment for its drive thru windows, which makes up 70% of McDonald’s business (


Outside of the 220,000 merchant locations already partnering with Apple Pay, there are a handful of big names refusing the offer. According to The Washington Post, “Wal-Mart said it will not join Apple’s new mobile payment system and will continue developing a separate one.” Currently, Wal-Mart along with Target, 7-Eleven, Southwest Airlines, the Gap, and Shell gas stations, all have exclusivity agreements (according to an anonymous source at the NFC Times) with Merchant Customer Exchange (MCX) “CurrentC” (Business Insider).  CurrentC works on any smartphone, not just the iPhone [reaching an even] larger potential market.  According to Business Insider, the merchants previously mentioned “control one in five retail dollars spent in US stores.”

QSR Magazine mentioned that both Google Wallet and Softcard already use NFC technology, but have not gained much traction with its users. Chain Store Age also stated that major online retailer, Amazon, with its Amazon Fire, offers virtual shopping capabilities, but only makes purchases from and Square.