The online checkout process can be a pain – customers must enter their 16-digit credit card number, expiration date, three- or four-digit security number and a whole bunch of other information in order to pay for purchases with that card. This is supposed to make online shopping safer and more secure, yet card not present (CNP) fraud, the kind of fraud that includes online shopping, is at an all-time high. This is what makes PayPal so attractive to online shoppers – credit or debit card information is securely stored with PayPal, and all that is needed is to click the PayPal button when selecting a payment type. But now PayPal has some competition.
Since Apple introduced Apple Pay, it has been the leading contactless payment app, allowing consumers to use the near-field communications (NFC) feature on their smartphones to pay for goods and services. Consumers upload payment card information to the Apple Pay app, where it is securely stored. When using Apple Pay to pay for goods or services, the consumer’s identity is authenticated with the iPhone’s fingerprint security. Previously, Apple Pay was only available on mobile devices, but now Apple is bringing Apple Pay to a website near you with the new Pay With Apple Pay button, that consumers will see alongside other payment options at online checkouts. The Pay With Apple Pay button will allow customers to use Apple Pay to purchase goods and services online. When Pay With Apple Pay is selected, consumers will be prompted by Apple’s Continuity feature to provide their fingerprint via their iPhone or tap their Apple Watch to authenticate their identities.
According to a PaymentsSource.com article, some industry experts refer to developments like Pay With Apple Pay as “security by design.” “It isn't technically revolutionary (reduces friction of integration and end use by incorporating new security technologies and ideas, like tokenization, encryption, or offering two-factor authentication), but it is a deviation from the way legacy players have approached, designed, and grown their interactions with their customers,” the article states. It also changes the way legacy customers interact with Apple, by offering customers who normally don’t shop on their mobile devices or make in-app purchases a way to use Apple Pay. Additionally, it brings in current Apple Pay users who may be using PayPal for online purchases.
Apple says it already has plenty of merchants signed up to accept Apple Pay online, including 21 of the top 100 online retailers such as Target, Staples, Kohl’s and UnderArmor, with more expected to sign on soon. While PayPal is still the undisputed king of online payments, Apple may be looking to overtake that No. 1 spot, as Pay With Apple Pay appears to be even faster than using PayPal, making it more likely that most sites that accept PayPal will add Pay With Apple Pay as an additional payment option for customers. Quartz.com even goes so far as to say this news isn’t good for PayPal, “(Gene) Munster says the online payments company works with 54 of the 100 top online merchants, but there will be a 43% overlap with Apple Pay merchants. And since Apple Pay is more seamless and faster than using PayPal, Munster said in an earlier research note, Apple’s web payment feature could hurt PayPal’s main business.”
Apple is a truly global company with tremendous reach and partnership power that has the ability to dictate new consumer behaviors. Before the introduction of the iPhone, there was no such thing as the App Store, because there were no such things as apps. Now, they are thousands of them, for any purpose or interest. Pay With Apple Pay may not be the first to debut an online payment system, they may just end up doing it better.