QuickBooks POS Apple Pay

The launch of Apple Pay earlier this year with much fanfare brought renewed attention to the concept of mobile payments and digital wallets. Will 2016 actually be the year digital wallets take off? And what will mobile payments mean to your small business in terms of cyber security and vulnerability?

What Are Mobile Payments and Digital Wallets?

Essentially, mobile payments are payments initiated through a smartphone app, which consumers can set up with their preferred payment method(s). Money used to facilitate these mobile payments are stored in digital wallets, which may be provided by a bank, private non-bank company (e.g. Paypal) or other financial institution.

For example, a consumer might link his or her digital wallet to a bank account, debit card or credit card. When customers pay with their digital wallets, the payments are made using the preferred payment method from the chosen financial services institution, all without a credit or debit card needing to be present or swiped. Depending on the digital wallet or mobile payment app used, consumers may wave their smartphones, tap their smartphones, use a PIN number or some combination of the above to pay via the app.

While Apple Pay has gotten most of the media attention, Google Wallet, the recently introduced Android Pay, Samsung Pay and PayPal are also big names in the mobile payments and digital wallet spaces. Some financial services companies are also rolling out their own digital wallet offerings, such as MasterPass (from MasterCard). Then there’s Coin, a credit card-like device that contains data from multiple payment cards.

New Technology

The concept of digital wallets has long been on the horizon. Back in the ‘90s, tech and business journalists dreamed of a future where people could pay for things by waving their phones. This future is here, but the actual use of mobile payments and digital wallets have lagged far behind their potential.