Everything You Need To Know About How To Accept Apple Pay
So, in honor of Apple Pay’s 3rd anniversary, we want to let you in on a little secret; it’s actually just as simple as taking regular credit card payments, and some of you may already be equipped to accept Apple Pay and you just don’t know it. Let’s take the next 5 minutes to dive into a deeper understanding of Apple Pay and explain how you can start accepting it as a payment method at your small business.
What is Apple Pay?
Apple Pay was made available to the US market on October 20th, 2014 and has seen steady growth since its debut. Apple Pay is Apple’s mobile payment system, or digital wallet service that leverages near-field communication (NFC) technology to allow customers to make secure, contactless credit or debit card payments at retailers around the world using an NFC compatible iPhone, Apple Watch, or iPad.
Basically, it’s a more convenient, and faster way to spend your money if you’re using an iPhone 6 or later. From a consumer perspective, you simply access the wallet app on your compatible Apple device, follow the steps on how to add your card information, or if it’s the same card linked to your iTunes account, you just plug in the card’s security code. Once the bank or card issuer verifies your card, you can start using Apple Pay at participating retailers.
From a merchant’s perspective, if you already accept credit cards, there’s a strong possibility that you’re already able to accept Apple Pay, you just need to turn it ‘on’ (but more on that later).
For now, let’s assume you’ve turned it on and it’s ready to use.
When a customer comes in your store and wants to use Apple Pay to pay for their items, rather than pulling out their physical wallet, they reach for their iPhone, hold the phone within centimeters of your payment terminal, rest their finger on the Touch ID until they see the done checkmark. That’s it. The transaction takes a matter of seconds and there is no change to your checkout process.
Why Use Apple Pay?
As a small business owner that accepts credit cards, you’re no stranger to the EMV Liability Shift of 2015 that was a forcing hand for card issuers and merchants alike to adopt EMV payment and acceptance technology. Since that shift, you have probably become quite familiar with the confusion and longer transaction times that is has unwittingly caused.
Fast Transaction Times
Enter Apple Pay. For merchants in the throes of EMV frustration over longer transaction times, Apple Pay seems to be the one saving grace. The average transaction time for EMV, from insert to approval, is about 16 seconds. Although some card issuers like Visa are making strides to quicken the chip card speed to somewhere between 7–10 seconds, that’s still no comparison to the 3 or 4 seconds it takes to complete a contactless payment with an iPhone and Apple Pay.
Is Apple Pay Secure?
Does that mean because it’s quicker that it’s less secure? No, in fact NFC transactions like Apple Pay are just as secure as EMV transactions, and more secure than magstripe, or swiped transactions.
Apple Pay leverages a payment security method called ‘tokenization.’ What this actually does is, rather than store sensitive card data on the mobile device, it replaces that data with something called a ‘token.’ The token is just a random series of numbers or symbols that are used to represent the card data and are meaningless on their own. The only parties that can decrypt, or detokenize the token are the card networks that have access to the tool to do so, under strict security protocols.
Adoption and Usage are Trending Up
Not only is it faster and just as secure as EMV, but like we previously mentioned, usage and adoption of this new payment technology has been steadily growing over the past 3 years. In 2014 when Apple Pay hit the U.S. market, only about 4 percent of merchants accepted it as a payment method. As of December 2016, that number has grown to 35 percent.
While stores are adopting Apple Pay at a slow and steady pace, consumers on the other hand have been a little more aggressive. A recent study suggests that Apple Pay will nearly double its user base to 86 million global users by the end of 2017, as compared to 45 million users in 2016. In a different survey, it was found that 80 percent of consumer spending in the U.S. was cashless. So even if you don’t accept Apple Pay today but you accept traditional credit or debit card payments, you’re in good company in the cash vs. card debate.
Customers Spend More
It’s also worth noting, that for decades there has been mounting evidence supporting the idea that credit cards encourage consumers to spend more than they would if they paid for the purchase in cash. The psychology behind it is, if you’re not handing over the physical dollars, there is a lesser sensation of a loss. With a credit or debit purchase, you’re not letting go of any money, the banks do that for you — behind the scenes.
To expand on that idea and how it relates to Apple Pay as a way to increase spending, we can take it a step further. With Apple Pay, the customer doesn’t even have to reach for their wallet to find their credit card. They can just reach in their pocket or purse for their iPhone (an action so many of us do, more so than we probably care to admit) and pay for their items without even touching the one thing (their wallet), that would remind them that they’re actually paying for something; creating an even smaller feeling of loss that translates into more dollars spent at your business.
Is There a Limit to Apple Pay Purchases?
Now that you know consumers are likely to spend more when they don’t use cash, how much more is that exactly? Is there a limit on Apple Pay transactions? Can they spend an infinite amount of money at your store?
The short answer to those questions is, no. There isn’t a set limit on the amount customers can spend at stores using Apple’s mobile wallet service. However, the long answer is that merchants and card issuers can impose their own limits on what Apple Pay customers can spend. The standard in the U.S. is, if you spend more than $50.00, you might be required to provide a signature with the transaction. In Canada, you may not be able to use Apple Pay at all, for purchases over $100.00 CAD.
Let’s take a U.S. merchant as an example. A customer comes into your hardware store and rings up $2,000 in merchandise. They pull out their iPhone to pay. Since the amount is over $50.00 a signature will probably be required. But wait, the transaction gets declined (awkward) because the card issuer set a hard limit for $1,000. Meaning that they will not process Apple Pay transactions over $1,000, even with a signature. So, while a retailer may have their own idea on spending limits, the customer’s credit card company and the bank also have theirs; and the latter two will always have the final say.
How Do I Start Accepting Apple Pay at My Small Business?
Now that you know what Apple Pay is, what customers can spend, and some of the benefits to using Apple Pay, we bet you’re wondering, “how can I start accepting Apple Pay at my small business?” Well, we’re glad you asked! Here are some things you need to know before and steps to take to get started with Apple Pay acceptance.
Start Accepting Credit and Debit Cards.
If you don’t already, there is no better time than the present to start accepting credit or debit cards at your business. While cash may be king in some instances, consumer spending habits are quickly dethroning that idea and making way for the new successors of plastic and digital.
Is My Payment Terminal Compatible with Apple Pay?
Like we previously mentioned, if you already accept credit and debit cards, you may already be equipped to accept Apple Pay and you don’t even know it.
Prior to Apple Pay and digital wallet services, card issuers such as Visa and Mastercard had NFC technology built into their physical credit cards or key fobs; known as Visa payWave and Mastercard ® PayPass. So, NFC payments have been around for some time. Which means credit card readers equipped with an NFC chip to accept contactless payments have also been in the market for some time. Thus, creating a higher probability that you may already have a contactless reader at your place of business.
You should check with your credit card processor or terminal provider to confirm if you have a terminal equipped with an NFC reader. If you do in fact have one, you will most likely have to do an over-the-air (OTA) download to update the software in order to ‘turn on’ the ability to accept Apple Pay. if you do not have an NFC ready terminal, the cost to upgrade is usually a few hundred dollars.
Upgrade Your Point of Sale System
Just like credit cards, if you’re not accepting them, now is the time to start. The same goes for a point of sale (POS) system. If you don’t currently have a POS system, now’s the time to start looking into one. Or if you have an outdated point of sale system, now is the time to think about an upgrade. In a world driven by customer analytics, digital payments, and mobile devices, you can’t afford to operate with outdated technology.
Nowadays, most new POS systems have the ability to accept Apple Pay as a payment type. The majority use 3rd party payment terminals (like mentioned above) that are either standalone or integrated into the point of sale system. Integrated is always the best way to go because all of your sales and tender types will be calculated in one place. This saves you from having to do any manual tracking with a payment sheet or other tool.
Check Your Ecommerce Platform
If you have an online store or are thinking about starting one, make sure that the ecommerce platform you use has the ability to accept Apple Pay. If it does, make sure you understand all the details of how you can implement it into your online store. Find out what gateway you can use to pass along the payments, what payment processors you can choose from, and if any of them are supported by your point of sale provider, then you’ve achieved an Apple Pay trifecta!
Are There Fees to Accept Apple Pay?
Now that you know what you need in order to start accepting Apple Pay, we bet you’re wondering, “how much is it going to cost me?” The short answer to that is, nothing; assuming you have a fairly new POS system. At which point, you just need to call your provider and have them turn on the feature for you.
As a small business owner that already accepts credit cards and debit cards, I’m sure you’re well aware of the fees associated with the processing of those cards. With Apple Pay, your processing fees will remain the same. There is no additional charge or interchange fee for an Apple payment versus a traditional credit card payment.
When a customer pays with Apple Pay, processors flag it as a card-present (CP) transaction, which is the same way they flag a swiped or EMV transaction in your store. If a customer pays with Apple Pay in your online store, it will be flagged as a card-not-present (CNP) transaction, which is the same way it would be flagged if the customer had to manually enter their payment details on your website.
In a Nutshell
Since both retailer and consumer adoption of Apple Pay are trending up and you now have a thorough understanding of how to accept Apple Pay and what it is, there is no excuse for you to not accept it as a payment type at your business. So, before you get distracted by something else, take a minute and reach out to your payment processor or point of sale provider and find out what you need to do to start accepting Apple Pay, today.
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As Content Writer at ShopKeep, the number #1-rated iPad Point of Sale System, Nicole Walters leverages her background in communications and her extensive experience in the payment and POS industry to create valuable content that addresses real problems and solutions for small business owners.
Originally published at www.shopkeep.com on October 16, 2017.