The much-touted Apple Pay is now here, allowing customers to link their devices to bank accounts or credit cards and use the payment platform to make purchases.
Many of the businesses that set up to accept Apple Pay so far are larger ones like McDonald’s and Whole Foods. But if you’re a small business owner, the newest mobile wallet platform has implications for you, too.
To use Apple Pay, a business needs what’s called a near field communications reader, or NFC reader. The cost for one of those readers runs from about $300 to $500, although some retail for less. The good news for small businesses is that replacing older credit card swipe terminals with NFC readers is an easy upgrade – much like replacing your smartphone with a newer model. Apple does not charge an added fee, so businesses that adopt Apple Pay will not pay extra on top of the credit card fees they’re already charged.
It’s worth talking to merchant card processors to see what they offer in terms of NFC options and what potential costs like equipment and transaction fees to expect, some financial experts advise.
How It Works
Apple has said it will accept American Express, MasterCard, and Visa cards, although not all the cards that those companies offer are included. Find a full list of participating issuers here.
When customers pay via Apple Pay, card data that’s encrypted on a chip in their Apple device communicates with the NFC reader. Customers then confirm payment with a fingerprint. On the merchant side, businesses receive a code for each transaction instead of credit card data.
The Costs and Benefits
One thing to consider when it comes to upgrading to an NFC terminal is that whether or not your small business plans to accept Apple Pay, you’ll likely need an NFC reader anyway. That’s because as of October 2015, all merchants will be required to take credit cards with EMV (that stands for Europay, MasterCard and Visa) chips for security purposes. NFC readers accept both digital payments and EMV cards.
Many analysts say that one of the benefits for businesses accepting Apple Pay is a competitive edge. While mobile payments aren’t new, anytime Apple adopts a technology it tends to become more widespread. Setting up to take Apple Pay could help small businesses keep pace.
Security is another potential benefit. Because Apple Pay sends a code for each transaction instead of sending credit card data, the likelihood of credit card information being intercepted is reduced.
On the downside, only iPhone users, and specifically only iPhone users with the latest version of the smartphone, can use Apple Pay. That means a large number of customers will be not be able to use the new technology. Businesses that choose to adopt Apple Pay and NFC readers will also have to embark on some customer education, letting customers know that they can use that form of payment and how to do so.