Free Apple Pay Research Paper Example
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In the contemporary times, the prevalence of the Internet has resulted in the transformation of the way people interact with each other on an international level. Personal relationships and business associations are no longer restricted by geographical or national boundaries. People have been enabled to connect and find common cause with others even if they reside far away. As far as commerce is concerned, there has been a similar transformation. Businesses are now conducted without any hassle and difficulty. Today, a business can find the appropriate global market for its innovative ideas, unique products and services. Considering the international markets, the payments markets are continuously shifting away from paper checks and cash. These conventional methods have now been switched to electronic payments. The use of debit cards and credit cards has become a usual practice. In addition, prepaid cards that can be reloaded have become commonplace as well. The payments market has turned out to be more dynamic than the previous times (Hayes & Dresner 3). The most renowned payment methods that are recognized, trusted and acclaimed around the world are PayPal, Webmoney, Skrill, Square, Google Wallet, and WalMart. In this paper, Apple Pay and Bitcoin payment methods will be discussed considering their remarkable features that are pushing the innovation envelope for the improvement of the banking experience for both businesses and consumers.
Apple Inc., popularly known as Apple, was founded in 1977. It is one of the world’s leading designer, manufacturer, and marketer of mobile communication devices, media devices, digital music players (portable) and personal computers. Apple is also involved in the selling of an array of related peripherals, services, software, networking solutions as well as intermediary digital applications and content. In September 2014, Apple introduced Apple Pay in an attempt to transform the way people make goods’ purchases in stores or through the Internet (online purchases).
How does Apple Pay Work?
Apple Pay has been introduced as a mobile payments service that allows shoppers to tap their iphones or Apple watch at checkout units to buy items without using cash or a credit card. Apple Pay has emerged as an efficient payment method as it makes it possible for the iPhone users to purchase things in applications. It is done through one touch making use of the credit card on file with iTunes. According to many, this move by Apple is a challenge for the established and well-known companies that provide online payment services including PayPal, Skrill, and Payoneer. It is worth-mentioning that Apple Pay works at a broad range of top-notch retailers like Walgreens, McDonald’s, Disney Store, Chevron, Meijer, Macy’s, and Whole Foods. Apps such as Instacart and Target also allow their users to pay with the new Apple product ("Apple Pay: Your Wallet. Without the Wallet”).
Using Apple Pay is extremely easy. All the user needs to do is to hold his iPhone, iPad mini 3, or iPad Air 2 up to a wireless payment terminal at the store’s cash register unit. The purchase is completed after using the Touch ID. The sensors are similar to the ones that are already installed in various big stores. Such sensors often consist of tap-to-pay terminals and card swipers. The most appealing feature of Apple Pay is that it is not necessary for the user to launch his Passbook or activate his iPhone. This is because the phone automatically wakes up after getting in terminal’s range. It then initiates the process of payment to complete the purchase after authenticating the transaction. This system employs a wireless technology known as NFC (Near Field Communication) for payment information transmission. It is also significant to mention that a user buys an item through an affiliated online store on Apple devices; he just has to use Touch ID for the purchase completion. The user may be required to pin a setting for enabling the supported app to access Apple Pay. However, it depends on the app whether it needs a setting or not. In some cases, the users may also put Apple Pay as their default payment method ("Apple Pay: Your Wallet. Without the Wallet”).
Another significant feature of this payment method is that it allows people to load their credit cards or debit cards (such as Mastercard, American Express, Visa) into Apple Pay after taking the card’s picture. The actual card information is not stored in the iPhone. Instead, it stores a placeholder ID that is encrypted and only delivers this ID to the checkout system of the store. The system matches that number with the account information held by the relevant bank or the credit card company. A checkout person is not able to see this information due to security reasons. In other words, every time a person makes purchases using Apple Pay, a one-time payment number is used together with an active code for security purposes. Thus, Apple promises to never share the actual debit or credit card numbers with businesses and merchants. This privacy is further validated as the transaction information is not saved by Apple. As transaction details are not stored by Apple Pay, it is not possible to tie back the private information to the consumers. However, Passbook keeps the account of the most recent purchases for the convenience of users. In addition, since an Apple Pay user is not supposed to show his debit or credit card and reveal his identity or security code to the store’s cashier, it is guaranteed that no private information is leaked ("Apple Pay: Your Wallet. Without the Wallet”).
Just like Apple Pay, Bitcoin is an inventive and ground-breaking payment network. It can be described as a “collection of concepts and technologies that form the basis of a digital money ecosystem” (Antonopoulos). This system consists of a currency known as Bitcoins. These units are used for the storage and transmission of value among the participating users of the Bitcoin network.
How does Bitcoin Work?
A peer-to-peer technology is employed for operation without any banks or central authority. Thus, transactions are managed and bitcoins are issued through the collective action of the network. It is an open-source payment network that is publicly designed so that no one can control or own it. Due to its several distinguishable features, Bitcoin users are allowed to access and use exciting functions that have not been covered by other systems already introduced to the people. Once a user installs a Botcoin wallet on his mobile phone or computer, the system generates a Bitcoin address for the user. A user can create more than one address. The address can be disclosed to the users’ friends, acquaintances, and business partners so that they can pay or receive payments. A Bitcoin wallet can be compared to an email as it runs similarly. However, a Bitcoin address can only be used just once (Antonopoulos).
Pros and Cons of Apple Pay and Bitcoin for Merchants and Consumers
As far as Apple Pay is concerned, the most important advantage it has is the simplicity of payment method. It takes just a couple of seconds for the payment to be processed. Second, Apple Pay is a secure payment method as the system does not need any card for transaction process. The device account number lessens any chances of information stealing. Third, the users enjoy greater privacy as the company does not keep data or track consumers’ transactions. In addition, there are lower risks of credit card breaches as experienced by consumers and retailers frequently. The absence of a card makes the process safe and secure as only the device account number and a security code are needed for payment processing. Furthermore, Apple Inc. does not charge any extra fee for Apple Pay. On the other hand, there are certain drawbacks of this new product. First, it could be a difficult adoption process as the shoppers are required to possess an iPhone or other devices that support Apple Pay. Similarly, every store and retailer does not have NFC terminals so it could be a difficult task to get both consumers and retailers adopt Apple Pay. Second, Apple Pay can be used for purchasing apps and other items. However, online shopping is not supported by this service which is a great limitation for a lot of probable online shoppers owning an iPhone. Moreover, even though there is no extra fee charged for the service, it is apprehended that the retailers could be asked for higher fees in future if credit card companies stop to share the transaction fee with the company.
Bitcoin also has several pros and cons. As far as its advantages are concerned, Bitcoin is a reliable system that protects consumers’ money and identity as no personal information or card number are needed for payment process. Second, payments can be sent and received at a negligible cost. Furthermore, no exchange fee or foreign transaction is required for international payments. On the other hand, a great disadvantage of this system is the irreversibility of transactions. In other words, there is no getting back of the funds if they are sent to a wrong address. For businesses, Bitcoin is a preferred method as there is less volatility risk involved with the payments. The businesses do not have to be concerned about consumer chargeback.
Apple Pay versus Bitcoin
Considering the features of the mentioned payment methods, it is expected that Apple Pay will be able to win the competition against Bitcoin. There are several reasons for this speculation. First, Apple has focused on customer experience by rolling out Apple Pay with its new iPhone. In addition, Apple Watch announcement has also received great admiration from the industry. In addition, more or less ten million iPhone 6 were sold in first week of its release. Although not all users are likely to use Apple Pay but many will and there would be less Bitcoin users if compared. Second, Apple collaborated with renowned brands even before announcing the launch of Apple Pay. Similarly, the company has secured its financial side by collaborating with American Express, Mastercard, Visa, and several banks in the United States. In contrast, Bitcoin is a limited payment system that is not known by as many people. Thus, if Bitcoin wants to compete with Apple Pay, it has to do a lot to work for its reinvention (Bradbury).
Antonopoulos, Andreas M. Mastering Bitcoin: Unlocking Digital Crypto-Currencies. O'Reilly Media, 2014. Print.
"Apple Pay: Your Wallet. Without the Wallet." Apple. Apple Inc., 1 Jan. 2015. Web. 19 Jan. 2015. <https://www.apple.com/iphone-6/apple-pay/>.
Bradbury, D. "Why Apple Pay Is A Threat To Bitcoin." CoinDesk RSS. CoinDesk, 11 Oct. 2014. Web. 20 Jan. 2015. <http://www.coindesk.com/apple-pay-threat-bitcoin/>.
Gleam, J. Apple Pay: A Guide to the Best Features of Apple Pay. Conceptual Kings, 2014. Print.
Hayes, T., & A. Dresner. "The Changing Face of the Payments System: A Policymaker’s Guide to Important Issues."ABA. American Bankers Association, 1 Jan. 2013. Web. 19 Jan. 2015. <http://www.aba.com/Tools/Function/Payments/documents/2013EmergingPayments.pdf>.
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