The launch of mobile payment services that could be a ‘credit card slayers’ is nothing new in finance, and many contenders have come and gone over the years – seeming to prove that as much potential as mobile payment platforms have, they can’t match that of credit cards. However unlike its predecessors, Apple Pay is designed differently and could make it the real deal.
It is worth noting that as it stands now, Apple Pay is not really a ‘replacement’ for credit cards per se and is more or less working with them in a collaborative effort to make mobile payments a reality. By allowing users to essentially ‘digitize’ their credit cards using Apple Pay, the platform is able to overcome many of the problems that faced previous mobile payment options – the biggest of which being the inconvenience associated with them.
Despite the fact that for now Apple Pay is working together with credit card companies, many are already predicting that soon enough Apply Pay will replace credit cards by offering its own ‘electronic currency’ or payment solution. While that is certainly a distinct possibility, it isn’t the only one.
Part of the advantage that Apple has going for it is its unprecedentedly large platform of devices in its iPhone line that it could use to popularize Apple Pay. For now however it is only able to be used on the latest entrants to the iPhone family, and even among them only an estimated 15% have actually tried to use it.
While it is still early days and 15% is really not all that bad comparatively, it does put the viability of Apple Pay as a credit card replacement into perspective.
The other big advantage that Apple is often said to have going for it as a credit card replacement is that it will be able to offer reduced fees compared to Visa, MasterCard or American Express. While that may be true, under the current system it is conceivable that these credit cards will be able to reduce their fees as well – due to the lesser risk of fraud.
Long story short, whether or not Apple Pay will replace credit cards is really still up in the air. For now it provides a secure way of using credit cards and may soon even help by reducing credit card fees and other charges too which is surely going to be welcomed by many dealing with credit card balance issues.
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