WASHINGTON (10/30/14)--Credit unions could become less competitive if they fail to participate in Apple Inc.'s emerging mobile payments system, according to one expert.
Although Apple Pay is rumored to net the tech giant 0.15% of every purchase made through the apparatus and is currently only compatible with a slim minority of smart phones, John Best, CEO of Best Innovation Group, said that its security features, speed, usability and potential for loyalty rewards could attract a significant amount of users.
Best made the remarks during a Wednesday webinar hosted by the Credit Union National Association's Center for Professional Development.
While a credit card is required to use Apple Pay, Best said that tokenization, a system of encryption, will give users an added layer of security. The recent spate of high profile data thefts, he said--like the 2013 scheme that continues to plague Target--could nudge consumers and retailers toward the service. Apple Pay also has an added layer of security by requiring transactions to be approved by biometrics.
Despite the security features, Best reported that integrating his American Express card and using the system were "easy." He also said the approved credit cards that already are registered with Apple's iTunes are automatically integrated into Apple Pay.
If credit union members currently attempt to sign up for Apple Pay, Best said that they will see a notification that "Your issuer does not yet offer support for this card." He pointed out that banks that finance 83% of U.S. credit card purchase volume are already on board.
Current drawbacks to Apple Pay, Best noted, are that it is only compatible with newer iPhones and, therefore, unavailable to most consumers, and that many merchants, both small and large, are not participating in the program.