Cardless charge

Enthusiasts waited in line for hours to make sure they would be among the first to get their hands on the absolute latest in Apple technology. This launch would be one of the most highly anticipated tech events in history.

The date? June 29, 2007. The event? The launch of the original iPhone.

Today, an original iPhone is a relic. An antique. The latest must-have technology is the revolutionary new iPhone 6. But how long that “newness” factor will last remains to be seen.

However, many analysts believe the recent launch of the iPhone 6 will be historic, not because of any new technology, but because of Apple’s introduction of Apple Pay—an audacious attempt to use existing technology to change the way we buy things and bring mobile payment into the mainstream. All the initial participating banks and retailers launched with Apple Pay on Oct. 1, so if you own a new iPhone 6, everything is in place for your mobile payment experience.

So, what might that experience look like?

Let’s say you’re standing in line at Whole Foods Market and you want to pay with Apple Pay. You approach the contactless reader, and when your phone comes in range, your default credit card automatically shows up. You simply touch the home button on your phone to authenticate the payment.

It’s that simple. No fumbling for cash or a credit card. Nothing to sign. Your phone doesn’t even have to be “unlocked.” You authenticate the purchase with your thumbprint on the home button. If this sounds risky, many financial industry security experts believe the Apple Pay system is more secure than a credit card. Your card number is never used. Once you’ve entered your card information into your phone, the software generates a unique 16-digit token for each purchase, so your account information is never stored on a retailer’s server.

Might Apple Pay eventually replace the old-fashioned wallet for many people?

“I hope so. It’s like high time,” says Om Malik, a partner in the venture capital firm, True Ventures. “I was pretty amazed by the Apple Pay announcement. It is very, very seamless and they’ve done a great job—they’ve brought in all the right partners. The ecosystem is already there, and I think what Apple has done is given the mobile payment system a massive jump-start by just being a player in the marketplace.”

Until Apple’s announcement in September, there hadn’t been a player with the product base, size, and reputation for innovation to make mobile payment a widely adopted practice. And Apple has spent the last two years bringing on board the three major credit card networks, VISA, MasterCard, and American Express, whose 11 card issuers represent 83 percent of the market. Apple also has lined up major retailers like McDonalds and Walgreens.

Apple will make a small fee on each transaction—some analysts believe it will be around 15 cents on every $100 purchase. But banks are playing ball with Apple in hopes that the increased transaction volume driven by Apple Pay adoption, as well as lower consumer fraud expenses, will more than make up any revenue lost to Apple.

There is a bit of irony in all of this. If the launch of Apple Pay truly tips the scales toward widespread adoption of electronic mobile payments, one of the major beneficiaries may very well be one of Apple’s biggest technological rivals: Google. For the past three years, Google has invested more than $300 million in its thus-far unpopular mobile payment system, Google Wallet.