DES MOINES, Iowa -- Last week, Apple announced hackers were able to gain access to numerous celebrities' digital accounts and expose their private, nude photos. This week, the company announced they'd like your iPhone to become your digital wallet.
With an onslaught of online security breaches circulating the in media recently, consumers are more aware than ever about Internet vulnerability. But in Tuesday's unveiling, Apple confidently pitched their mobile payment service to the world.
Apple's pitch suggests making a purchase with your phone, versus a credit card, is actually safer. "Apple Pay" will launch in October and works like this: iPhone owners input their credit card information into their phone, where the data is encrypted. Stores that implement the appropriate technology then allow for consumers to swipe their iPhone underneath a scanner to pay for a purchase, rather than swiping a credit card.
But the iPhone doesn't send your credit card information to the store; rather, a process called "tokenization" takes place. A digital "token" with a special code is sent from the phone to the retailer, who then sends it to the user's bank. The bank views the token as a "green light" to approve the purchase, and transfers the money from the card to the store, completing the circle. Apple Pay, then, never discloses your credit card information to anyone. Each purchase generates a new digital token, so if a hacker obtained it, they wouldn't have your credit card information. And Apple said if your phone is stolen, you can simply deactivate it remotely online, and the encrypted credit card data within it will be erased.
While Apple is suggesting a digital wallet in your phone is safer than a tangible one, experts say the trick will be whether or not consumers trust the service, and rally behind it.
A recent survey conducted by CreditCards.com shows 44% of respondents claim they would "never" use a mobile payment service to make a purchase, and 18% would "hardly ever." According to the site's data, then, Apple may face a tough challenge in getting users to trust - and use - the service.
Digital wallets aren't necessarily a new idea. Google launched the "Google Wallet" in 2011 but it didn't gain much traction for similar reasons. Terry Dooley, Executive Vice President of Shazam, Inc. in Des Moines, said a failure to gain momentum with a mobile payment service could ensure its downfall.
"That's what happened with Google Wallet," he said. "Stores don't adopt the technology to work with the service if they don't have consumers there who want to use it."
Though other companies' efforts haven't taken off in the mobile payment avenue, Dooley said if anyone can pull it off, it's Apple.
"They have a great consumer base who will adopt this technology," he said.
Whether consumers are willing to trust Apple's digital wallet pitch or not, Dooley said the mobile payment industry isn't just a flash in the pan; like the ATM and online banking - both of which took time for consumers to warm up to when they first launched - he said mobile payment services are here to stay.
"I don't think you'll see mobile payments go away," he said. "When we look at our data of how many Americans already make purchases via mobile device, it's a significant amount of the population."