- Apple Pay is a contactless mobile payment system that allows customers to make payments using an iPhone, iPad or Apple Watch.
- This payment method is secure for both consumers and businesses thanks to tokenization and encryption technology.
- There are no fees or additional costs for businesses to set up Apple Pay and begin accepting payments from customers.
- This article is for small business owners who want to set up Apple Pay for their business and begin accepting contactless payments from their customers.
As a small business owner, you want your payment methods to be easy – and safe – for your customers while also being simple for your employees to use and track. Apple Pay is a mobile payment method that customers like using and often cite as their ideal way to make purchases. Fortunately, it’s pretty great for companies too and it’s not hard to set up Apple Pay and begin accepting payments. If you’re considering Apple Pay as a payment option for your business, we’ve outlined what it is, what its benefits are, and the step-by-step process for implementing it.
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What is Apple Pay?
Apple Pay is Apple’s contactless mobile payment system. Users access it through an iPhone, iPad, or Apple Watch and use it to check out at a store or restaurant. The app contains their credit card or banking inform
Apple Pay is Apple’s contactless mobile payment system. Users access it through an iPhone, iPad or Apple Watch and use it to check out at a store or restaurant. The Apple Pay app stores their credit card or banking information so when they check out, all they need to do is tap their phone to a compatible card reader, instead of fumbling with their wallet. They can also send and receive payments from other users, make in-app purchases, and pay for rides on select public transit systems.
This point-of-sale (POS) method offers advantages beyond convenience. In the current pandemic economy, Apple Pay (and other mobile payment services) facilitate contactless payments, which helps keep both your customers and your employees healthy and at a lower risk of exposure. [See mobile POS success stories.]
Samantha Ettus, founder and CEO of Park Place Payments, stressed the importance of contactless payments. “We are living through a pandemic, which means that everyone now has some degree of germophobia. Customers do not want to give you their cards and touch them again. The demand for contactless payments like Apple Pay has never been greater.”
How does Apple Pay work?
As a mobile wallet payment system, Apple Pay uses near-field communication (NFC) technology to transmit payments. NFC allows two devices – in this case, the customer’s divide with the Apple Pay app and the business’s card reader or terminal – to communicate wirelessly when they’re in close proximity. Most contactless and mobile payment systems use a form of NFC.
To keep users’ information safe, Apple Pay uses a security process called tokenization that prevents fraud and identity theft. Tokenization replaces a consumer’s credit card account number with a series of randomly generated numbers, known as the token. The token travels over the internet or payment network and processes the payment without actual bank account details being exposed.
This process begins when a customer first sets up the Apple Pay app. They take a picture of their credit card, which Apple uses to contact the user’s bank or creditor. They replace the card details with a token, which is sent back to Apple and stored in the customer’s phone. Then when the shopper makes a purchase, the app uses the token and not their actual banking information to process the payment, which prevents hackers from extracting their credit card details.
How to set up Apple Pay for your business
Getting started with Apple Pay is quick and easy. Here are the steps to install a payment reader and set up Apple Pay.
1. Get an NFC-enabled payment terminal.
To start accepting Apple Pay and mobile payments, check with your payment processor to see if your current hardware supports this. If it doesn’t, work with the processor to purchase and install a payment terminal that takes contactless payments. [Related article: Upgrading Your Credit Card Terminals? Things to Consider]
2. Set up your reader.
Once you’ve purchased and set up your NFC credit card reader, test the reader to ensure it works. Then, place it where your customers can see and reach it at checkout.
3. Train your staff.
When your terminal is set up, train your staff on how to accept mobile payments on both the business side and the customer side. Even though most interfaces are user-friendly and intuitive, make sure everyone understands how to use the system and has some practice time with it.
4. Have customers place their device toward the reader.
Now that everything is set up on your end, direct customers to the terminal when they want to use Apple Pay at checkout. Once the card reader and their device connect, four green lights should appear along with a chime sound, signaling that the payment is accepted and the transaction is complete.
Getting started with Apple Pay is easier than you might think. Check with your payment processor to see whether your card reader is an NFC-enabled payment terminal. Once your terminal is set up, train your staff on how to accept mobile payments. Then, all customers need to do is hold up their device to the terminal to complete their purchase.
Should your business accept Apple Pay?
The two major reasons your business should accept Apple Pay are speed and security. Apple Pay (and other mobile wallets) are faster for many customers to use than credit cards and give users an extra layer of protection through their phones.
Mobile payment methods like Apple Pay are faster and more efficient at the register than cash or physical credit cards. The transaction process is simpler than magnetic-stripe or chip cards or the handling of cash, which means you’ll process checkouts faster. If your business is a restaurant or a store that sees a surge of people at certain times of day, this is especially useful – when customers check out faster, they won’t feel impatient and go elsewhere.
Customers who use Apple Pay benefit from an extra built-in layer of security just by using their phones. The Apple Pay app requires fingerprint or passcode authentication to use. Even if someone steals a customer’s phone, they still won’t be able to use that person’s Apple Pay, which lowers the risk of fraud at the point of sale. Compare this to a situation when a customer’s wallet is stolen: The thief may make several purchases before the credit card is reported stolen.
Plus, tokenization means Apple Pay and other mobile wallets are nearly impossible to hack. In contrast, paper cash and magnetic stripe cards can be counterfeited, putting both business owners and consumers at risk for fraud. Apple Pay’s individualistic payment method significantly lowers that risk.
When your business is capable of accepting credit card payments on mobile devices, you can process payments from anywhere.
What are the drawbacks of Apple Pay?
Apple Pay is not a payment processor. Check with your credit card processor to find out what’s needed to accept and process Apple Pay payments at your business. If you don’t currently have a credit card processing solution, we’ve rounded up the top options in our overview of the best credit card processors. See our review of Square and our Helcim review for two standout examples.
If you’re already working with a credit card processor and your existing card reader doesn’t have NFC technology, you may need to purchase new hardware.
“Apple Pay is a vehicle, which means that you need to put thought into which company you are using on the back end,” Ettus said. “Look for a processor that has a rate card that will enable contactless payments on its terminal before sending it to you and exceptional phone-based customer service.”
Apple Pay does have other potential downsides, too. First, it is only supported by Apple devices, so Android users must rely on other mobile payment solutions like Google Pay or Samsung Pay (for Samsung devices). If you set up your payment processor to support Apple Pay, you should ensure you also have the Android equivalents set up – otherwise, you may alienate a portion of your client base.
Additionally, mobile payments may cause backlogs at registers due to human error among new users attempting to use the novel payment method. This should only be a temporary inconvenience as shoppers and staff earn how to use Apple Pay, but it is something to be aware of.
Lastly, Apple Pay, along with other mobile payment solutions, can lead to card clash scenarios. This occurs when a shopper tries to pay with Apple Pay but has another NFC-enabled card in a wallet on the phone. As a result, a shopper may accidentally pay twice or the payment may not go through at all.
Is Apple Pay a secure payment option?
While we’ve discussed the high security level of tokens and the benefits of mobile payments, it’s still fair to ask if your customers’ banking information is secure when they use Apple Pay.
In addition to the tokens and fingerprint authentication mentioned above, the encrypted data associated with credit cards is always changing. That makes payment information difficult to hack. Also, if your customer’s phone is stolen, the thief won’t be able to use Apple Pay to buy something at your business without the passcode or fingerprint. The risk of a security breach is low, and your customers’ data is protected.
What are Apple Pay’s fees?
Aside from the cost of the processing terminal (if you’re required to upgrade the one you have or need to purchase one for the first time), Apple Pay is free for consumers and businesses to use.
There is no additional cost for companies to accept Apple Pay. Instead, Apple charges credit card issuers 15 basis points, or 0.15% of an Apple Pay purchase, for a guarantee that the tokenization is secure.
What hardware does Apple Pay require?
If your point-of-sale terminal already accepts contactless credit cards or Google Pay, you’re likely capable of accepting Apple Pay already. But if you’re not yet accepting contactless payments, contact your payment processor and ask them to help you set up your point-of-sale terminal to enable Apple Pay. This may require a new card reader, or it could involve a simple software or firmware update. [Learn more: How to Turn Your iPad into a POS System and iPhone Credit Card Processing: What You Need to Know]
Most modern payment terminals are already configured to accept contactless payments, including Apple Pay.
Who are Apple Pay’s competitors?
Two of the main Apple Pay competitors are Samsung Pay and Google Pay, alternative mobile payment solutions created by Samsung and Google, respectively. These methods are largely intended for Android devices, or Samsung devices in the case of Samsung Pay. Modern payment terminals that are configured to accept contactless payments should already be set up to accept Samsung Pay and Google Pay.
Other potential options include PayPal or Venmo. Both of these payment applications allow shoppers to pay for contactless purchases in brick-and-mortar locations through their respective apps. However, Venmo and PayPal require an additional checkout system that scans QR codes. Learn more about using PayPal and its mobile credit card reader.
What is Apple Pay’s impact?
Apple Pay is used by 507 million people worldwide, according to Statista. Data indicates that consumer use of mobile payment apps is only growing. Apple Pay is a modern, secure, efficient and, in the post-COVID world, hygienic way to accept payments. While Apple Pay has some minor downsides, none of them are unique. Rather, they apply to mobile payment technologies in general.
In short, businesses have more to gain because Apple Pay largely allows for quick and frictionless payments. Plus, added Ettus, “Accepting Apple Pay lets customers know that you are modern and up to date on technology.”
Jeremy Bender contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.