Apple Pay for NZ: hurry up and wait

The dream of paying for stuff with a wave of your smartphone seemed to get closer with the launch of iPhone 6 this month.

It’s about time. Being able to use your phone as mobile wallet has been just six months away for about five years now.

One of the holdups has been the lack of NFC (near-field communications) chips on some smartphones – namely Apple's iPhone.

Apple says its new iPhone 6 and 6 Plus, complete with NFC and Apple Pay software, will support wireless payments at retail.

Apple Pay also utilises the fingerprint scanner built into the latest iPhones so, potentially, you’ll only have to lay your finger on your iPhone’s Home button rather than tap in a PIN (something that’s Apple promises one-touch purchases. 

And through iTunes, Apple already has around half a billion credit card numbers on file.

Apple chief executive Tim Cook detailed a small army of partners: American Express, MasterCard, Visa, various US banks it says represent 83% of retail purchasing volume, and retailers including Starbucks, McDonalds, Subway, Walgreens, Macys, Uber, Groupon, Target and many others. All up, the company says 220,000 retail outlets are lined up.

All the ducks seem in a row for the Apple Pay launch in the US, which is promised for October.

So when will New Zealanders be able to March into a store and buy something with a wave of their iPhone?

It’s a case of hurry up and wait.

A number of New Zealand retailers have Eftpos terminals that support NFC technology, which is used by Visa's Paywave and MasterCard's PayPass. A rep for Visa told NBR the number is now around 20%.

But that’s only one piece of the puzzle.

Visa head of emerging products and innovation George Lawson told NBR his company first had to launch its Visa Token Service — a technology that replaces sensitive payment account information found on plastic cards with a digital ‘token,’ making the online or mobile payment secure – in New Zealand.

That would probably happen some time in 2015.

Once the Token Service is in place, Apple will be able to push forward with a local launch. Apple had no comment on timing.

MasterCard released an upbeat statement of support for Apple Pay, but could not immediately tell NBR when it would make specific moves to support Apple Pay in New Zealand.

Final piece in the puzzle
Rob Ellis, the head of TSM, the company co-owned by 5% owned by electronic payment processor Paymark (which in turn is owned by ANZ, ASB, BNZ and Westpac), with 2degrees, Telecom and Vodafone holding 16.6% each, is enthusiastic about Apple Pay.

“Apple support is the final piece in the puzzle for NFC, he says and it should prove to be “an absolute tipping point” for mobile payments to go mainstream in the US.

In terms of the local scene, Mr Ellis notes that beyond waiting for Visa and MasterCard to support tokenisation, credit card-issuing banks will need to validate and verify card details.

TSM has been beavering away on a mobile wallet to support what Mr Ellis estimates to be around 750,000 or so Android phones. It will shortly be able to add Apple support to the mix.

In terms of Apple Pay in New Zealand, that’s going to be Apple and how it prioritises the New Zealand market, he says.

It looks like it will be a case of enjoy your iPhone 6’s bigger screen, but we’ll probably be on the iPhone 7 by the time Apple Pay hits NZ.

Apple Pay a boon for Serko
One local who is immediately stoked about Apple Pay was Darrin Grafton, founder and chief executive of NZX-listed Serko [NZX: SKO].

In June, the Auckland-based travel software company said it had secured a patent titled "Travel expense automation" (listed as Patent 8762185 at the US Patent Office).

"It covers payment from a mobile device via NFC and the reconciliation back to an ERP system," Mr  Grafton tells NBR.

In plain English, that means leaving your travel expense credit card at home, instead using your phone for making wireless payments, and automatically updating your company's expense account tracking records at the same time for a paper-free process.

"The patent granted is the first part of a wider NFC patent that covers a wide aspect of the transaction. It will take another one to two years for the wider patent to be granted on all areas, Mr Grafton says.

"Wow, what a time to have the USA NFC expense patent,” Mr Grafton told NBR as news broke of Apple’s long-awaited support for the mobile payment technology on Wednesday.

 “I predicted this in 2009. Now the iPhone has NFC. Game On,” the CEO chirped.

ckeall@nbr.co.nz