Apple Pay Q and A: Ready to ditch your wallet?

Will consumers pay with their iPhones?

Apple wants you to ditch your wallet and pay with your iPhone.

The company took aim Tuesday at the increasingly vulnerable credit card system, integrating a mobile payment system called Apple Pay into its new iPhones.

The effort, which has been tried unsuccessfully by several tech companies, allows a consumer to store their credit card information in their phones and swipe the phone at new payment machines that are expected to be installed in stores across the country.

First, users place a finger on the phone's built-in Touch ID (which uses the user's fingerprint as a password). Then they hold the device near a contactless reader to instantly pay.

Apple, which promised a secure system, said it won't monitor anyone's shopping history. And, if the phone is lost, a user can cancel transactions remotely.

American Express, Visa and MasterCard, some of the nation's largest banks, and 220,000 stores, including Macy's, Walgreens, Subway, McDonald's and Whole Foods, are participating.

The system also works for online payments. Target, Groupon, Uber, Open Table and Apple will have the technology built into their apps.

The Tribune spoke with Rich Williams, Groupon chief marketing officer, and Michelle Evans, senior analyst for consumer finance at Euromonitor International, about Apple Pay.

Q: Mobile payment applications have been out there for a while. What took Apple so long?

Evans: Apple obviously didn't invent the first PC or the first music player or the first smartphone. I think in each of those cases it was waiting for the market to mature a bit, and then finally entered them and disrupted them. I think that's what they were trying to do with mobile payments as well. Apple's been giving hints of moving into payments for a number of years.

Q: Is this technology more secure than what's currently in the market?

Evans: I think there's always going to be risk of fraud. What makes Apple's payment system a bit more secure than others is that the credit card details are not sent over the air. Essentially, the payment is transacted using a one-time-only code. Then also you have the Touch ID sensor, the biometric element in which, obviously, they're adding another layer of authentication.

Williams: We care a lot about privacy and security, and Apple is bringing both a hardware and a software combination to add additional layers to that, which we think is interesting.

Q: We noticed stock in eBay, which owns PayPal, and a few credit card companies tick down after the announcement.

Evans: The card networks would have seen a bigger hit if Apple had tried to bypass them.

PayPal has a number of a partners, but it certainly hasn't made inroads when you look at the number of partners Apple announced. I've never seen a product like that come to market with that many people already on board.

The problem with Google Wallet is, you had to have a credit card issued by Citibank, it had to be on the MasterCard network, you had to have a specific Samsung phone on the Sprint network. There were simply too many caveats for consumer adoption.

Q: What's helpful about Apple Pay for companies who've hopped on board?

Williams: We're one of the biggest mobile commerce companies in the world at this point, with over 92 million app downloads. This is a simplifier. For new users on a Groupon app, it will make account creation easy, because you already have all your credentials stored in your iOS device in your iPhone instead of having to type in long credit card numbers.

How many times have you had to type in your name, your address, your phone number, your credit card number that you have to pull out of your wallet and remember or read and type it in? It simplifies that process. Especially on new accounts.

The Washington Post contributed.

jwernau@tribune.com

Twitter @littlewern

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