Will Apple Pay finally make mobile payments the norm?

With Apple Pay, security and payment experts believe that digital payment may finally take off

Whatever your feelings towards the potentially damp squib that was the reveal of the Apple Watch last night, the real star of the show for enterprise was Apple Pay.

The company will place this at the heart of iOS 8. Utilising near-field communications (NFC) technology in the new iPhone 6 and 6 Plus devices in a move that could finally see NFC not just widely adopted, but widely used, too.

Apple Pay will marry up with the existing - but rather unused - Passbook app in iOS, the difference being that simply swiping the phone will now utilise NFC and treat the device like a credit card.

Immediate fears about this service, as with any NFC-driven payment system, are about security. But Mark Bower, vice president of product management at Voltage Security, begs to differ. He actually believes that Apple's tokenised, non-static credit-card number approach will in fact improve security.

"With this announcement, Apple validates the data-centric security model and shines a spotlight on the need for the payment world to move on from vulnerable static credit-card numbers and magnetic stripes to protected versions of data - tokenised payments," said Bower.

"Through the use of this data-centric security strategy, Apple Pay reduces risk of data breaches and credit card theft where it is supported."

But Bower identifies the other problem with Apple Pay, and that's the ongoing issue with e-wallets in general - convincing vendors to actually pick it up and work with it.

While many major banks and e-payment companies are now running digital wallet services, uptake has not been enormous and, despite several years of pushing, it's fair to say that mobile payments are still not the norm.

"The world today is still in an early adoption phase with regard to new payment methods and mobile wallets, and retailers still have to contend with EMV and mag-stripe data and advanced threats," he said.

However, Bower is enthused by Apple Pay as it enables mixed payment environments to be secured end-to-end all the way from the point-of-sale card reader to the payment host, "enabling merchants to accept new and old payments protected under a powerful unified data-protection framework to thwart advanced threats, all the while ensuring a seamless customer experience".

Meanwhile, as Souheil Badran, senior vice president and general manager at Digital River World Payments, points out, Apple has a good deal more customer-based grunt to match its technical improvements.

"Apple's decision to enter the payments space looks set to have a far-reaching impact on consumers, merchants and, of course, Apple's own business," said Badran, describing Apple's full entry into e-wallets as "a timely move".

"The company has been laying the foundations for this kind of initiative for some time: it introduced its Touch ID fingerprint sensor with its last iPhone launch and its iBeacon system of Bluetooth transmitters has now been available for about a year.

"These elements, combined with the 800 million plus credit cards that are already registered with Apple through iTunes, mean that it is well positioned to carve itself a slice of the global mobile payments market, which was estimated to be worth $235bn in 2013," said Badran.

But, like Bower, Badran agrees that retailers themselves may still represent the roadblock to widespread adoption.

"For merchants, the outlook is less certain and there remain more questions than answers right now. The payments market has been inundated with new wallets and technologies in recent years and, with no clear winner among consumers, many merchants have found it difficult to decide what payment offerings to invest in, and when," he said.

He continued: "If Apple can succeed in this space, and offer a ubiquitous solution, it could help simplify the landscape for many merchants."

In addition, Badran argued, the long-term prospects for Apple Pay will depend on just how well its new systems will work with existing payment technologies, as well as that crucial user adoption.