Why Apple Pay (and Other Mobile Payments) Won’t Replace Your Wallet

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You already carry your smartphone everywhere you go ― in fact, you probably already have your smartphone out at the register while you wait for the cashier to bag your groceries. So, using your smartphone as a way to pay is actually rather convenient.

That’s what smartphone developers are hoping at least, as Apple and Android both release their mobile payment systems. Instead of reaching for your wallet and digging out cash and card, smartphone users can pull up an appropriate app and wave their devices at the register, wirelessly dispensing the appropriate amount of money.

To many, the process seems ideally futuristic ― utterly utopian ― and some predict the end of traditional payments altogether. However, before you slice up your credit card and burn your dollar bills, you might want to learn more about the potential for mobile payment systems.

The Tech Is Actually Quite Old

Mobile payment systems rely on a technology called Near Field Communication (NFC) which actually has its roots in radio frequency identification tech developed in the 1980s. NFC is probably already in your wallet right now, since most major credit card manufacturers integrated the tech for contactless payments eons ago. In fact, NFC has been used in cellphones and other mobile devices since 2007, but only in the past year or so have phone developers thought to combine these common uses of NFC.

Even if NFC were brand new, mobile payment still requires traditional payment options to function. On Apple and Android devices, you input your credit or debit card numbers, which are then charged whenever you make a mobile purchase. Apple has plans to develop its own banking system, which it says will do away with physical currency altogether, but such drastic changes to the economic system are certainly not likely to occur soon. For the foreseeable future, your mobile payment system of choice will not work without your wallet.

Traditional Payment Is Too Good

Even if Apple does create digital currency in your lifetime, it is unlikely that the iDollar will be more advantageous to the user than modern ways to pay. For one, the diversity of payment options today is of outstanding value, allowing consumers to optimize their purchases for maximum benefit. For example, individuals can open bank accounts that grow their savings in specific ways, while businesses can apply for credit cards that give them rewards tailored to their needs. Rewards credit cards in general are simply too beneficial for most cardholders to drop, even when presented with a trendy, Apple-based payment option. For the moment, Apple Pay is useful alongside rewards cards, but a new payment option could change that.

Security Is a Major Concern

Fortunately, Apple was smart enough to prevent the transmission of personal payment information over NFC, which is notoriously susceptible to interception from data-hungry thieves. Instead, Apple Pay uses the payment information you input to communicate with your bank, creating a device account number which is then transmit to payment receivers. Apple claims that there is no way to link the device account number with any personal data.

Unfortunately, over recent years, Apple’s reputation for security has decreased significantly. Not only are Apple devices increasingly targets of malware ― despite the company’s prior reputation for invulnerability to attack ― but the release of dozens of nude photos of celebrities due to hackers’ infiltration of iCloud proves that Apple is not nearly as focused on protecting user data as it should be. Though experts may not find a glaring weakness in Apple Pay, hackers surely will in time, as they always seem to do.

Devices (or Users) Just Aren’t Reliable

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Nearly 1 in 5 phones have taken a swim in the toilet. About 13 percent of Americans drop their phones in beer. Millions of phones have seen horrific ends, sizzled in the fireplace, shredded by the lawnmower, eaten by dogs, and worse. Every year, more than 33 percent of phone users lose or break their phones. If your only source of payment is stored on your mobile device and you accidently crush your phone in the grocery store parking lot, you simply cannot make any purchases until your new phone arrives.

Not Everyone Has Access

There is a good reason Apple wants to make Apple Pay the only way to purchase goods and services: It requires everyone to purchase an iPhone or iPad. Currently, only about half of American homes are outfitted with at least one Apple product, but if Apple Pay takes off, every member of every household in the country would need a device of his or her own.

Unfortunately, not everyone can afford the luxury of an Apple device. Though life without a smartphone may be unimaginable to many, a significant portion of the population can barely afford shelter and food, let alone fancy gadgetry. In reality, the best reason Apple Pay and other mobile payment services will not make cash and cards obsolete is the fact that Apple and other phone manufacturers will never reach 100 percent adoption, which is what they would need to replace your wallet.