Will Apple Pay Change How Credit Cards Are Used?

Part of the branding for Apple Inc. is that people can expect big announcements from the company to reform industries.  Beginning with the MacBook, followed by the iPod, and eventually the iPhone and iPad, Apple is renowned for changing electronic industries.

So when the company confirmed a new announcement scheduled for yesterday, many people stopped to take notice.  The new iPhone 6 debuted alongside the new Apple Watch, and Apple CEO Tim Cook says both devices could change the credit card industry across the US.

By the end of 2015, most credit cards in the US will be embedded with the new chip and PIN features.  These chips contain near field communication (NFC) technology that transmits between the credit card and a payment terminal.

But the new Apple products will also contain the NFC technology, which will allow shoppers to make mobile payments within close proximity to a payment terminal.  The new venture will be known as Apple Pay, and is the latest attempt to recreate how Americans use money through so-called digital wallets.

The mobile payment industry is a growing sector, with technological market researchers estimating the market is already worth billions of dollars.  Many retailers that sell in brick and mortar stores as well as online are also in favor of mobile payments, which are expected to bridge the gap between in person and online shopping.

Kevin Talbot, an investor in mobile payment companies, spoke with the Wall Street Journal about Apple reforming the credit card industry.  He believes the biggest hurdle for reforming credit card payments is education. 

Talbot says people must understand who mobile payments are an improvement over standard credit cards, but believes Apple could be the company to finally simplify the message.

“The question for Apple is if they can take the complexity out of paying with a smartphone, to make it as easy as using a credit card is today.”

Some people may embrace the new digital wallets, while others are likely to stick with traditional credit cards – no matter how appealing Apple presents the alternative.