The big news from last week was Apple’s announcement of the iPhone 6 and 6 Plus. The biggest difference for this year’s models is, of course, the bigger screens they offer. However, another new feature exclusive to these phones and Apple’s forthcoming Watch product should be of particular interest to points and miles travelers.
Introducing Apple Pay
Apple’s new Pay (Apple Pay) system is going to make playing the points and miles game much easier and more secure for many people. Apple Pay will allow customers to use their phones to make wireless payments, in lieu of whipping out a traditional, plastic credit card. Payments are verified using a combination of security features.
First, TouchID, the fingerprint scanner Apple embeds in the iPhone’s home button, will be used to verify payments using the phone can only be made by the phone’s owner.
Second, the NFC antenna used to transmit information only works over extremely short distances, normally a couple inches at most. That means it’s difficult to intercept signals the way unencrypted traffic can be tapped into on public Wi-Fi networks.
Third, Apple and the major card issuers are employing a tokenized transaction ID system. In the most basic terms, this means your card number seems to change for every transaction, as far as the point of sale system at a retailer is concerned. That means that even if your card number is somehow stolen, it doesn’t matter: all that’s been stolen is a one-time use code that’s already been used.
iPhone Or No, Still Big News
Though this is very much a travel and not a tech blog, I’m sure there are at least a few readers out there with Android devices fuming over the fact that their phones were capable of similar wireless payments a year or more ago.
While this is technically true, Apple’s move into the payment sphere is great news no matter what type of NFC-capable smartphone you might have.
That’s because the biggest hindrance to wireless payments taking off thus far has been adoption by retailers in no rush to replace their existing point of sale systems and by issuing banks suspicious that wireless payment initiatives might eventually cut them out of the loop.
Last year’s hack of Target’s payment systems has set in motion a chain of events on which Apple is capitalizing. Retailers are updating point of sale systems to support Chip and PIN or Chip and Signature-based credit cards as a way to beef up payment security and limit their liability on fraudulent transactions. Nearly all of these point-of-sale systems also include wireless payment support, first deployed for cards with embedded wireless support but compatible with NFC-based systems like Apple Pay.
In addition, Apple announced specific Day One support by a number of major retailers, including major department stores, pharmacies, fast food restaurants, leisure brands and more. That’s a critical piece of the equation that’s been missing up to now, leading to a chicken-or-egg conundrum earlier solutions have been unable to overcome.
Apple was also successful in corralling nearly all of the major card issuers. Citi, Chase and American Express are on board starting day one, along with many others. Only Barclaycard and Discover are lagging behind, and both have already pledged support for Apple Pay in the near future.
Adding cards to Apple Pay is extremely simple: you simply take a picture of the front of the card using your iPhone’s camera and its information is automatically added to your onboard Passbook. You may set one card as your default method of payment, but also add as many cards as you’d like to the system. That’s better than hardware-based alternatives like Coin that promise to include multiple cards’ information on one card-like device.
When you’re ready to pay at a retailer, you simply hold your new iPhone close to the NFC reader. Your default card will automatically pop up, but you can select a different one with one touch before proceeding to pay by verifying your fingerprint on the TouchID sensor.
Apple’s forthcoming Watch will also support Apple Pay, including support for multiple cards. Next year’s iPhones will definitely include the feature as well, in addition to models further down the line. While Apple Pay may only be available to early adopters in the immediate future, it’s going to become a commonplace payment mechanism in the next few years.
Apple Pay: Great For Earning Miles & Points!
This is great news for points and miles travelers because managing credit cards can be such a hassle. In order to maximize your travel-earning potential, you may decide to carry many travel credit cards, like I do, in order to take advantage of category-specific bonuses.
When buying office supplies, I’ll instead use my Ink card in order to earn a 5x bonus.
When at a retailer that doesn’t offer a multi-point bonus with another card, I’ll typically use my Barclaycard Arrival+ since it earns 2 points per $1 on all transactions.
This can become a real hassle to juggle, with a wallet that is uncomfortably thick. If you ever lose your wallet, it can also be a huge pain, requiring you to make many calls to card companies and activate a whole fleet of new cards later on.
With Apple Pay, you could reduce your wallet to just one or two cards you use most often and choose to load the rest to your phone, leading to better security and convenience. Rather than shuffling through your wallet trying to find the right card to earn the most points, you can tap on a picture of the card on your phone and use it right away. Future integration with services like Wallaby that help you maximize your earnings by recommending the right card for the right occasion will only serve to make Apple Pay all the more convenient.
If Apple had created its own payment system from scratch, it could have been terrible news for miles and points earners. Choosing between the chance to earn rewards or pay with ease would have been terrible.
Thankfully, Apple decided to work hand in hand with card issuers, instead of take a more competitive role. That means we can enjoy all the benefits of card-based reward programs while still benefiting from more secure and convenient transactions. With Android-based models sure to follow suit with a similar system, that means good news for everyone, whether you’ll be standing in line for a shiny new iPhone 6 this weekend or not!