What is Apple Pay and How to Accept It

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The pandemic of 2020 has changed the way many businesses operate, including broadening the use of contactless payments in order to reduce or eliminate the potential for spreading Covid-19. One such contactless payment option that has seen incredible growth is Apple Pay. It’s likely you may have noticed the option the last time you drove through Starbucks, McDonald’s, or Taco Bell.

If you’re a merchant or service provider looking to expand the payment options that your business accepts, it makes sense to consider the popularity of Apple Pay. It could attract a new demographic of customers to your business as it’s a prime payment choice for millennials and those that prefer contactless payments. If you choose to go with Apple Pay, then read further to learn more about how to accept it. 

What is Apple Pay?

Apple Pay, Apple’s digital wallet, was first introduced in September 2014 as a collaborative effort between Apple, Visa, MasterCard, and American Express. Prior to joining forces, Apple and these three major credit card companies had each been trying separately to develop a payment method that would replace the traditional credit card payment system with single-use digital “tokens.”

The goal of this idea was to simplify the payment process while also reducing the fraud potential inherent with exposing personal data and account numbers to merchants and employees via the handling of credit cards. Apple Pay accomplishes this by replacing credit card account information with a digital token that’s exchanged between a user’s Apple device and a merchant’s Point of Sale (POS) system by simply holding the two devices in close proximity. The process of creating the unique digital token is referred to as tokenization. In addition to enhancing account security, mobile payments are simply faster than cash or credit card payments. A simple and speedy checkout reduces payment hassle for the customer which is bound to reflect positively on one’s business.

Overall, it has come a long way since 2014, it’s now accepted at most prominent major retail outlets. You can find the Apple Pay option at stores such as Costco, Kohl’s, Staples, and Walgreens. Chevron accepts Apple Pay for fuel purchases, and even the posh department store, Bloomingdale’s has chosen it as its contactless payment option.

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How Does Apple Pay work for Consumers?

Apple Pay functions as a digital wallet. An Apple customer can use an iPhone, iPad, or even an Apple watch to complete purchases as long as they have an Apple ID account. The steps for activating this feature can be found under the ‘Settings’ tab on the designated Apple device. Choose ‘Wallet and Apple Pay’ from settings, then add credit and/or debit card information to the Apple Pay account. You can do this by taking a picture of the card with an iPhone or iPad, or you can input the information manually.

 After the card account information is loaded, you can pick one to use as the default for charges when completing purchases. Credit card account numbers are not stored on Apple servers or within the iPhone, iPad or watch. Instead, a unique Device Account Number (DAN) is encrypted on the user’s Apple device and every transaction is completed with the creation of the unique digital token described above.

To confirm an Apple Pay purchase, Apple provides transaction security via biometrics. Apple’s Touch ID and Face ID involve verifying purchases with a fingerprint or with facial recognition. You can use a password to verify your purchase as well, but biometrics are far more secure. Apple Pay provides the user with the ability to review their payment transaction history by checking the Apple Pay digital wallet account. Another key security benefit for Apple device users is that they can easily suspend the use of Apple Pay within the “Find my Phone” feature if their phone has been lost or stolen.

Apple Pay stores a user’s billing, shipping, and contact information via encryption, allowing a merchant’s payment processor to take transaction security one step further by verifying that the address of the Apple Pay user who initiated the purchase matches the address of the credit card on file with the bank.

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Payment Transactions with Apple Pay

Once it is set up on a user’s device, how do they use it for payment transactions? First a user must click open Apple Pay on their device. If the payment will be processed with the default credit card, simply hold the Apple device over the POS terminal or mobile reader and then approve the transaction with either a thumbprint or Face ID. In the case that the user wants to switch to a different credit account, they need to select the appropriate card icon before confirming the transaction. The POS terminal or reader uses an NFC connection to share information with the Apple device. NFC stands for ‘near field communication’, which allows NFC enabled devices to talk to each other.

How Can a Merchant Accept Apple Pay?

If you’re a brick-and-mortar business owner, the first step to accepting Apple Pay is to review your current payment processing hardware to see if it’s already configured to accept mobile payments, if not then you’ll need to get an NFC-enabled POS system or card reader. Payline offers hardware options that are suitable for in-person payment transactions and can help you determine which one would be the best fit for your payment needs. The next step would be to thoroughly train everyone taking payments, including employees on the proper use of the system.

Alternatively, if you have a business that’s on-the-go, like a local General Contractor who takes payments all over town, the importance of contactless payments becomes more critical during the current health crisis. A General Contractor bids on projects both large scale and small and should offer payment options that fit the needs of both individual homeowners and commercial property managers. Apple Pay fits the needs of both types of clients.

Setting up Apple Pay as a small business owner simply requires using an NFC-enabled payment reader that is IOS compatible. Square currently offers Square Stand which fits the newest version of iPad and iPad Air. If you’re not currently an Apple device user, there are many options with Square and other readers that are Android compatible. You can also reach out to your payment processor, such as Payline, to review your business needs. Your payment processor can help you select a mobile reader that will work best for you and your clients.

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Accepting Apple Pay as an Online Merchant

Apple Pay is booming as a payment option for eCommerce merchants as well as in-app device purchases, and Apple doesn’t charge a merchant fee to use Apple Pay, so this versatile mobile payment option should reduce your operating costs. Shopify and other prominent online selling platforms have already integrated Apple Pay for merchant storefronts so business owners can simply add it to their checkout page. Many other selling platforms and individual eCommerce merchants are embracing the growing wave of consumers who prefer digital wallet payments to the use of traditional credit cards. 

As an example, let’s say you have a passion for vintage clothing and want to set-up a storefront on the popular millennial resale site Depop. Depop offers two payment options, PayPal and another called Depop Payments which is currently available to U.S. and U.K. Depop Merchants. Depop Payments includes Apple Pay and debit card payments in order to allow Depop sellers to attract a wider range of potential customers. Customers who prefer to pay with Apple Pay on Depop’s website or in their app, simply click ‘Apple Pay’ at checkout, then tap the Apple Pay button on their device. The device will pull up the user’s current billing and shipping information in case changes are necessary. The last step is to double-click the device to pay, then confirm the payment with biometrics or a password.

 Although traditional e-commerce markets, such as clothing, books, electronics, food, etc. can use Apple Pay for payments, Apple does have restrictions on use for certain high-risk businesses. For instance, if you plan to sell items like tobacco, e-cigarettes, ammunition, or firearms then your business is prohibited from using Apple Pay as a payment option. Apple’s restrictions extend to other types of online sales as well, so it makes sense to check the Apple Pay restrictions page to see if your eCommerce site is listed before going through the process of setting it up as a payment option for your customers.

 The Take-Away

Contactless payment processing and digital wallets are growing in popularity as consumers transition to a touch-free payment world. Apple Pay has become the most popular mobile payment system in the U.S., so adding it to your business’s payment options could help expand your client base as well as keep your current clients happy with the speed, security and simplicity that Apple Pay provides.

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