What Apple’s major announcements mean for franchising

Tuesday’s announcement from Apple that it will release the iPhone 6 and iPhone 6 Plus for sale next week and the Apple Watch early next year was a must-watch event for technophiles across the country, but franchise operators and small-business owners should also take note of one of the day’s other revelations: Apple Pay. Tech columnists and trend watchers predicted that Apple Pay might be the industry’s best chance for popularizing mobile payments. The iPhone 6 will come equipped with a near-field communication, or NFC, chip, meaning a user can wave the phone at a special sensor linked to a merchant’s point-of-sale system, and a payment will be taken from whatever credit card information is stored on the phone. In 2011, Google tried to get consumers to replace their wallets with their phones, but its Google Wallet application largely failed to take off. PayPal and Venmo also have a one-touch payment function with their smartphone apps, and providers like LevelUp can develop payment apps for individual brands, but paying by smartphone still has yet to achieve wider adoption. According to a CreditCards.com survey cited by Forbes, 62 percent of Americans “never” or “hardly ever” use their smart phones to make a purchase, and sizeable numbers of consumers in all age groups don’t plan to ever replace their wallets with a smartphone. Nearly two-thirds of adults 65 or older are not interested in mobile payment, as are nearly half of people 50 to 64 and 30 percent of Millennials. But features of Apple Pay, to be included in iPhone 6 and the Apple Watch, might increase the adoption of paying by smartphone. Data security — Consumers have grown increasingly wary of linking their credit or debit cards to online accounts or smartphone apps in the wake of highly publicized hacks that have compromised millions of cards at major retailers like Target and Home Depot. Apple’s own iCloud platform was hacked a few weeks ago as well. Apple has sought to allay data security fears with Apple Pay by creating a one-time, unique number for a person’s payment card—either linked to the person’s iTunes account or added to Apple Play—that does not identify a person’s name, 16-digit credit card number or security code. Even when the iPhone user loads credit card info into the phone by scanning the card with the phone’s camera, that identifying information is not stored on the phone or in Apple servers; only the unique code is stored. In order for the phone to identify its owner as the rightful user and produce the unique code for payment, the user must press the Touch ID sensor on the iPhone 6, which responds only to the rightful owner’s fingerprint. Major retail partners — Apple announced that it had developed and tested Apple Pay with major retailers like McDonald’s, Target and Subway. The three major credit card companies — MasterCard, Visa and American Express — are also on board, allowing their cards to be scanned and stored within Apple Pay. Apple said more than 200,000 merchants will support the new platform by letting customers select Apple Pay at checkout. Among the first brands announced as Apple Pay partners were Panera Bread, Chipotle Mexican Grill, Whole Foods and Starbucks Coffee. At first, Apple Pay will be available only in the United States, but the company will roll it out to more countries soon. App development — Apple Pay fits into Passbook, a platform currently in place on the iPhone where brands have developed digital loyalty cards and where consumers can store coupons, airline tickets and membership cards. Through a partnership with payments processor Stripe, Apple Pay will enable small app developers to add the functionality to existing and new branded apps. On the Apple Watch, to be released next year, third-party app developers can create customized apps just for the wearable device using Apple’s WatchKit program. American Airlines, Pinterest and BMW have developed apps for the watch already, which were demoed at Apple’s announcement Tuesday.