Apple Pay: What's the Big Deal?
Let me begin this week's column with more than a few disclaimers. First, I'm often wrong when it comes to Apple because I underestimate the blind admiration a large number of people have for the company. Second, 30 years ago I made a snide remark about the first Apple mouse and the Apple mavens have developed a fable about this proving I'm an idiot. Third, I predicted the iPhone would be a flop because I was not allowed to see the phone in advance. When I actually saw the thing I knew it was a winner and game changer, but nobody remembers my change of opinion. Fourth and last, I predicted that Apple would adopt Windows as its OS and got that wrong, for sure.
I correctly predicted that Lisa would fail back in 1982, and that the stupid Apple floppy disk would flop. I said Apple would adopt UNIX—it did. I said that the early "toilet seat" Apple laptop would fail—it did. I can go on and on with correct prognostications, but the reputation persists.
This brings me to another prejudice I've exhibited. I do not like the idea of a cashless society any more than I like the idea of keeping my data and records on the cloud. I do not trust a system that can lock me out, whether by design or by accident. There are far too many people out there who want to steal your money. While the new mechanisms such as Chip-and-PIN or NFC or Apple Pay or any of them might mean well, in the end, they are flawed because computers are involved.
When I imagine a cashless society I immediately think of stories like the Target store hacks, where tons of data, including credit card information, was stolen. Yours to be exact. Then Home Depot gets hit. Then Staples. If these folks cannot maintain the integrity of these databases of confidential information, then who can? They all have the budget for it. But they did not do the job right. They are cheap or careless or incompetent. Choose one.
So somehow Apple Pay is going to be fully secure? Google Wallet is going to work? Google could not even make its competitive service to PayPal come close. It was a difficult-to-use, miserable disaster in comparison to PayPal.
Supposedly Apple Pay is going to move us to a version of Chip-and-PIN using NFC technology that has been around for years. In fact, a lot of people thought Bluetooth would be doing this chore over a decade ago. In the late 1990s IBM gave a presentation showing a watch performing this sort of transaction.
If there is anything actually new regarding any of this technology it's the demands of corporations trying to plug security holes with new, expensive gear in which they do not want to invest.
I'm not even sure how they pulled it off, but the taxpayers will be picking up the bill for billions of dollars, retrofitting the transaction terminal across the country to NFC and Apple Pay terminals thanks to a Presidential Executive order signed into law on Oct. 17.
For starters all government payment systems have to be updated to Chip-and-PIN by 2015. While the private sector can ride on these coattails, you can be sure the small shops will not be getting any sweetheart deals. Buy more expensive technology and you'll need more maintenance than before, which is not cheap.
So this new system is happening, like it or not. Whether Apple Pay leads the way or follows remains to be seen. The overall idea is to get rid of cash with the argument that it will stop drug dealing and money laundering. It will just change the way business is done in that environment.
This whole exercise is an exercise in unnecessarily spending money to fix what is not broken. How much time is actually wasted when you swipe a card at the grocery store? Not that much, but let's fix it.
This is much like smartphone-based boarding passes. I've seen about one out of 10 of these virtual boarding passes fail, forcing that passenger to wait when the failure occurs. Yes, it's a cool idea, but so is printing a boarding pass at home.
Unfortunately, the public is all gaga over the idea of replacing a card swipe with an NFC pass-over using a smartphone. Go ahead and believe that. But if you think it is also hacker-proof, you'll be in for a surprise. It's no safer than using the mattress to stash cash. At some point, you can expect to be robbed blind.
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