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GWEN IFILL: If you happen to be one of the millions who bought a new Apple iPhone in recent weeks, or you are waiting for your upgrade to arrive, you may feel like your wallet is getting a little lighter, and not just because of the price of the phone.
In an era of electronic payments, technology is turning the wallet in your pocket digital.
Hari Sreenivasan has our conversation, recorded in our New York studios.
HARI SREENIVASAN: Paying for something with your phone isn’t necessarily a new idea. I have been using mine to pay for cabs for the past year. But, today, Apple launches its mobile payment platform called Apple Pay.
And here to help us understand how the arrival of Apple into this arena changes the game is Arik Hesseldahl, a senior editor at technology news site Re/code.
So, why is it a big deal that Apple decides to do something that Google has been doing for a while?
ARIK HESSELDAHL, Re/code: Well, partially because, with the Google experience, it has been inconsistent. There has been a lot of resistance from the carriers.
For instance, Verizon has its own payment plans and has resisted Google’s infrastructure, Google’s plan. And so it has been an inconsistent and an uneven experience on the Google platform. With apple, we have a completely unified experience.
Apple has also — it’s been a lumbering giant in payments for a long time. There are more credit card accounts associated in the iTunes infrastructure than on Amazon or PayPal. And so it has only been a matter of time for the technology to come and the experience to show up and make it easy for consumers to use.
HARI SREENIVASAN: So besides Apple and Google, you also hear Wal-Mart and PayPal. All these people are getting into this arena. Why is it so important for them to control the actual transaction? What do they get out of it?
ARIK HESSELDAHL: There’s a lot of money.
They are multibillion-dollar businesses. First Data is one and there are numerous other payment processors build multibillion-dollar business on essentially pennies and fractions of pennies. There is always money to be made on the swipe of a card or in this case now the wave of a phone.
HARI SREENIVASAN: So what has the industry response been to this, when they realize that Apple has this unified experience that might lure a lot more consumers to do this? Are there companies that are concerned that this is something that — basically that user experience is slipping away from them and possibly into Apple’s favor?
ARIK HESSELDAHL: Yes, one potential threat is really going to be PayPal, Apple’s partner, with a lot of apps on the phone to use this Apple Pay system to pay for virtual — to pay for things that you would buy online in the app. And that is a threat to PayPal because they have a lot of in-app and also just online payments. I use PayPal a lot myself, not just for eBay things, but also just to pay certain bills sometimes.
But — so that’s one thing threat. But it is also, I think, a lot of the retailers don’t want to be left out in the cold, partially because there is this moment right now where credit cards, the old mag strip has been around since the 1960s. It’s really being phased out.
And there is a lot of new infrastructure coming in. There is the chip and pay. There’s tokenization. There’s all kinds of new security measures, and Apple is kind of like seizing on this moment to sort of like change the paradigm a little bit.
So if there is a moment where consumers really want to pay for their phone, we are going to know it definitively. It’s been kind of an uneven experience. The data has been a little bit — a little bit inconsistent so far. And so we’re going know definitively and for sure whether or not consumers really want to do this.
HARI SREENIVASAN: So, are we a step closer to paperless currency?
ARIK HESSELDAHL: Paperless currency? I don’t know. When was — how much cash do you carry these days? I don’t carry cash very often. It’s very strange. I carry some kind of a card.
I haven’t started paying with my phone yet. I’m a little bit of a Luddite in this, believe it or not. But, yes, I think we’re also seeing this moment where people are experimenting with Bitcoin. Now, that is a little bit on the fringes, but it’s definitely — there’s definitely a lot of things happening on the currency front that are kind of changing our economic behavior, changing what are perceptions of money. We have come a long way from having to have silver coins and gold coins.
HARI SREENIVASAN: Well, and you had people back then to carry your bags, right?
ARIK HESSELDAHL: People, yes.
HARI SREENIVASAN: Because it was dirty money. You didn’t want to get your hands dirty.
ARIK HESSELDAHL: Exactly. Exactly.
And so I don’t like getting my hands dirty with cash any more than anybody else does. So we have — but it’s also a lot less friction. You know, the time spent on a transaction needs to be shortened. It’s all about time and friction and complexity. And waving your phone makes it a lot more simple.
HARI SREENIVASAN: And also possibly that you will spend more if the friction is less.
ARIK HESSELDAHL: If the friction is less, the tendency to spend may be more, yes. So consider yourself warned.
HARI SREENIVASAN: All right, Arik Hesseldahl from Re/code, thanks so much.
ARIK HESSELDAHL: You bet.
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