5 things to look for inside an Apple iPhone digital wallet


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If there’s a techie in your life, they’re probably excited about Apple’s iPhone 6, which will be unveiled on September 9. But personal finance nerds will be on the lookout for an integrated mobile payment system, a digital wallet, that lets users do without all their plastic on the next shopping spree, according to multiple reports.

Although the details about the new phone have not been released, it is difficult for the famous secret Apple to keep things under wraps these days. Based on the leaks, speculation abounds about the features of the iPhone 6 and how they may change the way consumers pay for what they buy on those trips to the mall.

Are you excited, but not sure what to expect? Here are five things to keep in mind that can be key to knowing if the new phone will explode where other digital wallets have struggled:

1. Safety features

When it comes to getting consumers to trust technology with sensitive financial information, security carries a lot of weight. According to a study by Thrive Analytics, less than a third of people actually use digital wallets mainly due to concerns that critical data such as account numbers could be stolen. However, mobile payment systems can significantly reduce fraud.

“From a consumer point of view, mobile wallets or mobile payments in general offer a more secure way” to pay, says Richard Crone, founder of industry consultant Crone Consulting. Most credit cards used in the US contain key information on a magnetic strip that can be read at the cash register and can be easily copied surreptitiously, becoming a gold mine for experts in technology.

“You can’t get rid of that risk until you ditch the card, and that’s one of the promises and a great opportunity for mobile payments,” says Crone.

The iPhone 6 will reportedly use technology like Apple’s Touch ID fingerprint scanner to provide more privacy and an extra layer of security.

two. Merchant acceptance

Consumers are unlikely to use a payment method if it is not accepted by mobile operators, card issuers, and retailers. Apple’s challenge is to create a system for these gamers to employ, allowing phone owners to take advantage of their phone’s digital wallet technology.

“To be successful, Apple’s wallet must have a compelling business value proposition, such as reducing a merchant’s operating costs or helping generate more revenue, in order to gain merchant acceptance and preference at checkout,” Denee Carrington, a senior analyst at Forrester Research, says in a blog post presenting a report on the new iPhone model. The study looks at the importance of getting retailers to allow consumers to use their payment system.

A key element in that effort may come in the form of agreements that Apple has reportedly engineered with Visa, MasterCard, and American Express. If these top three credit card providers agree with Apple, as Bloomberg News has reported, your mobile wallet can quickly gain widespread acceptance. By comparison, Google Wallet hasn’t caught on after more than two years on the market, according to Bloomberg Businessweek magazine. In part, that’s due to early technology glitches and questions raised by some card issuers and service providers.

Since Apple owns the iOS operating system, it will be easier to add the payment technology to other new iPhones and other mobile devices. Apple supplied about 42% of all smartphones in use today, which may make it easier for the company to expand the base of any payment system it introduces, according to a Quartz report. And the company already has a retail relationship with more than 800 million people through iTunes and other online stores, which gives it a huge advantage.

3. Tap to pay

The mobile payments industry has not settled for a standard technology to facilitate interaction with merchants’ electronic records. Competitive systems have used Near Field Communication (NFC) chips, barcodes, and Bluetooth devices to make those connections.

Designed by Apple NFC technology on the iPhone 6 to connect your mobile wallet to cash registers, according to the Financial Times. The system enables wireless data transfers, allowing users to pay with just one touch on the phone.

Four. Loyal users

Big names like Google and eBay, with their PayPal unit, have offered digital wallets, as have lesser-known companies like Square and Opening including Softcard, Coin and Loop. Yet only 7% of consumers at most use their phones for in-store purchases, according to a 2014 report by Bain & Co. consultants.

So while Apple won’t be the first to jump into the mobile payments fray, the market remains open. A key advantage may be the company’s consumer appeal, along with the nearly 1 billion people who shop at its online stores. In other words, brand loyalty can give Apple’s mobile wallet the boost to take off.

5. Convenience

Consumers want more convenience from digital wallets, such as receipt tracking and financial management tools, before paying and using the systems, according to a report from Accenture consultants.

Apple may have heeded such concerns. The iPhone 6 wallet can store digital coupons and support “virtualized currencies” like Bitcoin, Business Insider reported, based on patent applications the company has made.

The rumor will come to a head on Tuesday, when Apple takes off its wrapping and shows the world what the iPhone 6 can do. It remains to be seen if a new on-board payment system can convince skeptical consumers and merchants.


Apple logo via Shutterstock.

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