Payment methods and technologies have shifted a great deal over the years. Gone are the days where cash and check transactions make up the bulk of the give and take that occurs when people engage in commerce, travel and otherwise spend their money. Credit and debit cards have ruled the roost for a while but some new contenders are starting to emerge. The first major alternative to the conventional credit cards and other more traditional methods was PayPal (PayPal, 2017). However, smartphone-enabled technologies such as Apple Pay, Samsung Pay and Android Pay are starting to dominate the commerce and money exchange landscape (Apple, 2017; Samsung, 2017; Android, 2017). These trends and evolutions are important because there has been a marked shift in the way people pay each other. Society is becoming increasingly cashless and the emergence of payment methods like Apple Pay are just one manifestation of how smartphones and tablet technology is taking over more and more of our daily lives and the banking industry has actively embraced this trend (Gordon, 2016). The drivers of this trends are improvements in technology and the greatly advanced level of convenience that permeates the ability to pay people on the fly and in a secure manner. Indeed, being able to limit or even stop risks related to data hacks of firms like Target and Home Depot is seen as a boon and a high level of insurance in a world that can be perilous even from a strictly financial standpoint (Robinson, 2014). The ability to have this protection while traveling or when going to hospitality vendors in general is also something with immense advantages but there have also been some growing pains and struggles when it comes to the expanding and improving technology of paying other people (Sickel, 2016).
Definition of Payment Technology
When it comes to the definition of payment technology and the parts that go into the whole, the author of this report shall consult and use the Oxford Dictionary. Rather than go after the entire term up front, the author will instead break down the parts of the whole. A “payment” is defined by Oxford as the “action or process of paying someone or something or being paid”. Alternately, it is defined as “an amount paid or payable”. A tangential definition to that second one is “something given as a reward or in recompense for something done” (Oxford Dictionary, 2017). In a similar way, the definition of technology should also be explored. Indeed, Oxford defines technology as “machinery and devices developed from scientific knowledge”. It can also mean “the branch of knowledge dealing with engineering or applied sciences”. Finally, it can mean “the application of scientific knowledge for practical purposes, especially in industry” (Oxford Dictionary, 2017). To fuse them together, payment technology is the combining of scientific and technological resources with the ability to make payments. Rather than relegating people to using paper money (or coins), paper checks or the more established technology of credit cards and their associated processing systems, people are now commonly using their smartphone as an extension (or in place of) their wallet or checkbook (Hammel-Bonten, 2015). In many instances, people are able to leverage technology to make and receive payments in an instantaneous and cashless way. Apple Pay, which shall be the primary focus of this report along with the tourism and hospitality industry in particular, is fueled by the use of Near Field Communication (NFC) technology that allows a smartphone to “talk” to a payment terminal and transmit debit or credit card information in a secure and encrypted way (Parker, 2015).
Apple Pay Summarized
Now that the stage has been set in terms of the industry that will be focused upon when it comes to payment technology and the precise payment technology in question, that being Apple Pay, it should now be explained what the other important nuances and bits of information that are related to Apple Pay and what people should know about the same. Apple’s main mission, as partially touched upon before, is to use Apple Pay to entire replace the need for a wallet. Rather than have to lug around credit cards, checks or cash, the mission is to allow people to just have their smartphone with them and thus allow them to pay for items they need. Indeed, many industries and businesses around the country have embraced Apple Pay and the associated NFC technology mentioned before (Faulkner, 2015). The important features to know about Apple Pay include the just-mentioned integration and use of NFC technology, the use of Touch ID (fingerprint verification) for security and where the technology is deployed and can be used (Ritchie, 2013). At present, the locales where hospitality entrepreneurs and clients can use Apple Pay include the United States, the United Kingdom, China, Australia, Canada, Switzerland, France, Hong Kong, Spain, New Zealand, Japan and Singapore (Golkie, 2016). In the United States alone, there are 2.5 million locations that accept Apple Pay (Rao, 2016). It can also be used on the World Wide Web with MacOS Sierra and Mac iOS X. The phones and devices that can use Apple Pay include the iPhone SE, the iPhone 6, 6s, 6 Plus, 6s Plus, 7, 7 Plus and Apple Watch. People that have the Apple Watch can couple that with an iPhone 5 and use Apple Pay with that phone (MacRumors, 2017).
Setting up Apple Pay does not take a lot of preparation. Indeed, it just takes a little due diligence ahead of shopping at a hospitality or other kind merchant. People sign up for Apple Pay and are then able to add debit or credit cards to their smartphone “wallet”. Once the card is added to the phone’s data banks and the Apple Pay program, the card can then be used when one is out shopping or purchasing something from a hospitality merchant, presuming they accept Apple Pay. If they do, the patron can turn on their phone and “use” their card through fingerprint verification and transmitting the credit card information to the merchant. This allows the patron to pay for the goods or services that they are buying while not divulging their unencrypted credit card number, expiration date or CVV code, the latter being the three-digit verification code on the rear of the actual debit or credit card. As transactions are completed and executed, they are tracked within the phone and in other computer and data systems that can be consulted and used later. Beyond that, the contact information for the bank in question is made readily available in case it is needed by the consumer. As for a case study that can and should be used to justify and tout the benefits of Apple Pay, the pieces of the example that shall be used have already been mentioned. Indeed, Target had their credit card information hacked during a holiday season within the last few years. They were retaining credit card information from prior transactions and that information was later compromised and stolen (Finkle, 2013). This led to a great number of credit cards having to be cancelled and reissued either because the card was used fraudulently or as a proactive measure in advance of such a thing actually happening. The use of Apple Pay helps avoid all that because the actual and full credit card information is never transmitted to the store or merchant. Indeed, a person can go to a hospitality vendor and use Apple Pay. If that merchant is hacked and their information is stolen, there should be absolutely no injury to the client using Apple Pay because the information provided was encrypted and, beyond that, was for one use only. Even if the hackers were able to find that information, they would not be able use it for their benefit since the “token” and transaction are complete and cannot be revived (MacRumors, 2017).
Comparison to AliPay
As for how AliPay compares, positively or negatively to Apple Pay, the answer is mostly positive. The company boasts more than 400 million users, although it’s more prominent outside of the United States rather than within it. One thing that compares very positively to Apple Pay is the fact that they offer a full reimbursement of authorized transactions up to 90 days after the fact. Beyond that, they assert that they offer quick response times to issues that arise. Like Apple Pay, they offer integration with payment methods that are well-known to the hospitality industry and this would include Visa, MasterCard, Maestro, American Express, Western Union and WebMoney. There are also accommodations made for those that use Qiwi Wallet. Not unlike more Western options and companies, they have a Facebook Page. AliPay is part of the very large Alibaba and AliExpress line of companies and they have been a presence for more than a decade now. For those not in the know, Alibaba is a fast-growing firm that enables and allows for products and supplies to move around the world. While this may not impact hospitality transactions directly, it would certainly affect those that supply and support the same either in plain view or behind the scenes. Indeed, Alibaba’s main categories of influence and behavior include agricultural, food/beverage, apparel and textiles, bags/shoes/accessories, beauty care and health, tools/machinery, electrical equipment and telecoms, metallurgy and chemicals, transportation, home appliances, consumer electronics and so forth. As one can easily see, many of those industries and realms have some or heavy involvement with the hospitality industry. The sell items on a one-off basis and they also sell clearance stuff, items in bulk and they offer warehousing for those that need it. Perhaps they are missing the presence of firms like Amazon and hospitality giants in particular, but they are certainly in the conversation when it comes to payment technology and supplying firms within the hospitality realm. Alipay, though, is a huge hit and is heavily used in China. Even though they boast three times the population of the United States, they bear the same overall economic might (AliPay, 2017; Alibaba, 2017).
Downsides
The one big downside to Apple Pay is that Apple’s mission to “replace” the wallet is absolutely well under way. However, it is nowhere near being a reality as this time. Even in the United States, only about a third (35 percent) of merchants accepted Apple Pay as of December 2016. Just two years ago, in 2014, that number was only four percent. The reason behind this is that not all payment terminals are able to make use of NFC technology (Kate, 2017). If a hospitality merchant does not have NFC as part of their point of sales framework, they cannot extend the use of Apple Pay to their patrons. Beyond that, many hospitality industry places work mostly through cash and/or credit cards. At a restaurant, for example, it is still commonplace for the final bill to be left at the table. At that point, the patron would pull out a credit card and that card would be run to settle the bill. This pattern of behavior is obviously not conducive to Apple Pay (Tnooz, 2017). On the other hand, settling bills with hotels and the like are much more conducive to allowing Apple Pay to be used but even hotels and such are not as quick to adopt Apple Pay and similar technologies (MMH, 2015). However, Marriott has bucked that trend by implementing the proper technology (Marriott, 2017). This stands in contrast to what places like gas stations, retail stores and grocery/supermarket places are doing. One other thing that has to be pointed out is that one of Apple Pay’s competitors, that being Samsung Pay, is able to pay with a credit card even if NFC is not present with the terminal (CNN, 2017). Indeed, the phone can be placed by the magnetic stripe reader of a terminal and the information of the card can be transmitted just like is was actually swiped. This technology is limited to only Samsung Pay but there are only a few participating banks at this point. By contrast, Android Pay and Apple Pay use basically the same technology and have the same options. Even so, some places do Apple Pay only, some do Android Pay only and some do both. It entirely depends on the decisions and preferences of the retailer or merchant in question (Parker, 2017). A final disadvantage that should be mentioned is the perceived or actual phenomenon of people spending more due to not seeing or otherwise visualizing the money they are spending. This is certainly not something specific or solely related to Apple Pay as much the same thing can be said for other mobile payment services as well as credit cards or even checks. Even though there are ways to view and summarize reporting when it comes to what is being spent, the same is true of credit cards and that is not a salve to the concerns involved either (Bruce, 2017).
Reflection
It is clear from coming up in the school systems and this society that technology and society is evolving and changing at a very rampant pace. I do expect that some of the older and more mature of society and the business ownership realm will want to stomp the brakes and resist the progress and changes that are occurring. However, I will not do that from a general perspective and from that of a person that wants to be a manager in the future. Rather than push back or otherwise resist the times as they are changing, I will try to balance embracing what is to come and the cost/benefit ratios involved when it comes to the same. It did not make sense to openly embrace Apple Pay just two years ago when it was a very small sliver of the market, for example. However, that has clearly changed and businesses that ignore that do that at their peril, in my opinion. Given that, if I worked for a hotel or hospitality industry job and they did not offer Apple Pay, I would suggest strongly and in a constructive fashion why they should change their tone and embrace the mobile payment technology movement given that it is surely in full swing right now and the level of adopting within the hotel industry is rather low.
I am fully aware that the younger generations, the Millennials and Generation X in particular, are driving the changes that are occurring and the pace that is present is here to stay. Indeed, for Apple Pay to go from nothing to being able to cover a third of the market in 24 months is nothing short of phenomenal. If that pace continues, it is fair to say that they will have most of the market by 2020, if not sooner. However, there will be others that resist change and that will not keep up with the changes.
When it comes to the hospitality sector in particular, it is clear that payment services and technologies like Apple Pay are not going away and they will become more and more prominent. Users in a time of Uber and other newer and cashless services will demand the security and convenience of services like Apple Pay and they will tend to glom onto merchants and services, hospitality and non-hospitality firms like, that do the same. Not only do I know that, I also desire and demand the security and convenience that comes with such technology and options and I would want the same for both my future subordinates and my customers. Insomuch as the author of this report will part of the commerce and hospitality framework, the author will embrace this technology and the growing acceptance and use of the same. Doing otherwise will lead to customers choosing other options.
Conclusion
It is clear that there is a “curve” when it comes to acceptance and implementation of the technology. The early adopters of Apple Pay and its complementary or alternative offerings are the same people that have, are or will be feeling the growing pains. It is also clear that mobile payment options like Apple Pay and others will eventually become the norm. While many merchants and firms do not choose to support Apple Pay at this time or NFC-enabled terminals in general, this will surely change over time as firms need to update and upgrade their systems to keep up with the processing power needed and the consumer payment options demanded by the customers. Surely, the hospitality industry will adjust and evolve as well so as to acclimate to the changes and advancement of technology that has and continues to occur. Even if some vendors and merchants resist using the new technology in all of its forms, the consumers will push back and push for what they’d like to see when it comes to payment methodology and options. Those that refuse to listen or otherwise fail to upgrade and modernize their system to match the trends and requirements of the industry and the consumer will almost surely be left behind as consumers will reject them in favor of hospitality and other vendors that are willing to progress and expand their payment and similar options. Given the rather advanced and rampant growth of the technology over the last two years, it would seem that changes will be coming sooner rather than later.
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